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Publications of the Hanken School of Economics

Nr 210

Anna Talasmäki

The Evolving Roles of the Human Resource Function

Understanding Role Changes in the Context of Large-Scale Mergers

<
Helsinki 2009
The Evolving Roles of the Human Resource Function: Understanding Role Changes
in the Context of Large-Scale Mergers

Key words: Human Resource Management (HRM), HR function, mergers and acquisitions
(M&As), organisational change, role theory

© Hanken School of Economics & Anna Talasmäki

Anna Talasmäki
Hanken School of Economics
Department of Management and Organisation
P.O.Box 479, 00101 Helsinki, Finland

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ISBN 978-952-232-064-3 (printed)

ISBN 978-952-232-065-0 (PDF)
ISSN 0424-7256

Edita Prima Ltd, Helsinki 2009

 i

ACKNOWLEDGEMENTS

Writing this thesis has not always been pleasant. At times I have compared the research
process to a long and lonely walk in the desert without water or compass – not knowing
where I am heading or how I will get there or how long it will take. With a sense of relief
and utter gratitude I realize that the journey has come to an end. I want to thank each
and everyone who has supported me through the process. Thanks to you I have in fact
never ever been alone.

I want to thank my advisor and teacher - Professor Ingmar Björkman - for his support
throughout the process. His thoroughness, efficiency, quick-wittedness and his ability
to make sense of my vaguely expressed ideas have not only made a life-long impression
on me but most importantly substantially raised the standard of this thesis. My second
advisor Dr. Mats Ehrnrooth is greatly appreciated for his knowledge and skills as a
researcher and for showing his co-workers a great deal of respect. I feel he has been a
role model by adding lots of humanity to the research process. I have very much
enjoyed working together with the two of you. Thank you!

I want to express my gratitude to the pre-examiners Professor Catherine Truss of

Kingston University and Professor Wolfgang Mayrhofer of the University of Vienna for
their valuable examination of my thesis, based on which I tried to clarify several aspects
of my work. Their insightful comments are deeply acknowledged.

The financial support that I have received during these years has enabled full-time
research as well as attendance at research conferences and courses abroad. I am
indebted to the Liikesivistysrahasto, the Marcus Wallenberg foundation, The Otto A.
Malm foundation, The Ella and Georg Ehrnrooth foundation, the Oscar Öflund
foundation, the Nobility Association, Hanken School of Economics foundation and the
Finnish Graduate School in International Business (FIGSIB) for their financial support.
The study could not have been carried out without the cooperation of the case
organisations. I am grateful to the corporations that agreed to take part in the study
and greatly appreciate the time and engagement of the interviewees.

The department of Management and Organisation has been a good place to work – the
co-workers are not only skilled researchers but also great people. I am thankful to both
previous and current co-workers for their support. The numerous discussions we have
had about life in general and the research process in particular have been very
motivating. Anette, Denise, Jennie, Lotta and Pernilla as well as all my other co-
workers too numerous to be mentioned by name deserve to be acknowledged. In
particular I want to thank Beata and Jonna for their friendship.

I have been blessed with a large circle of close friends thanks to whom my work-life
balance has never had a chance to become unsound. Especially I want to thank Daniela,
Johanna, Christel, Jenny, Susanna, Pia, Saara, Hannele and Hanna for their friendship
and for bringing a great deal of joy to my life.

My parents Gitta and Fredrik have given me a good foundation in life. I would probably
not have begun my doctoral studies had not my dad taught me to value education, and I
would perhaps not have finished had not my mum taught me to use my inner strengths.
Most importantly, I want to thank you for being there for me.
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My dearest thanks go to my nearest ones – my husband Ville, and our children Viggo
and Louisa who were born during my doctoral studies. Family life has been a top
priority during these years, and so it shall continue. I love you.

Helsinki, August 24th, 2009

Anna Talasmäki
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CONTENTS

1 INTRODUCTION.......................................................................................1
1.1. Background of the study....................................................................................... 1
1.2. The HR function in M&As .................................................................................... 3
1.3. Purpose and research questions........................................................................... 3
1.4. Definitions............................................................................................................. 4
1.5. Research approach................................................................................................ 5
1.6. Structure of the thesis........................................................................................... 5

2 PREVIOUS RESEARCH ........................................................................... 7

2.1. HRM and the role of the HR function.................................................................. 7
2.2. Frameworks for HRM...........................................................................................8
2.2.1. Tyson’s and Fell’s building industry metaphor..................................... 10
2.2.2. Storey’s four types of personnel practitioners....................................... 12
2.2.3. Monks’ four models of personnel management.................................... 13
2.2.4. Ulrich’s (1996) multiple-role model .......................................................15
2.2.5. Ulrich’s and Brockbank’s revision from 2005....................................... 18
2.2.6. Additional research on HRM in Europe................................................20
2.3. The HR function and role change ...................................................................... 21
2.3.1. Previous empirical evidence on role change ......................................... 21
2.3.2. Mergers as change makers..................................................................... 22
2.4. The HR roles framework .................................................................................... 22
2.4.1. The applicability of U.S. studies ............................................................ 23
2.4.2. The applicability of normative statements ............................................ 24
2.4.3. Five roles of the HR function ................................................................. 25
2.5. Factors influencing the roles of the HR function .............................................. 29
2.5.1. The outer context ................................................................................... 31
2.5.2. The inner context ................................................................................... 32
2.5.2.1. Organisational factors ............................................................ 33
2.5.2.2. Individual factors.................................................................... 35
2.5.3. Merger specific influencing factors ....................................................... 37
2.5.4. The complexity of inter-related influencing factors.............................. 39
2.6. Summary of chapter two .................................................................................... 39
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3 RESEARCH METHODS ......................................................................... 42

3.1. Research design .................................................................................................. 42
3.1.1. Finnish-Swedish mergers ...................................................................... 42
3.1.2. Mergers and non-mergers...................................................................... 43
3.1.3. Case study approach............................................................................... 43
3.1.4. Retrospective study ................................................................................ 44
3.1.5. The research process .............................................................................. 44
3.2. Pilot study ........................................................................................................... 45
3.3. The main study ...................................................................................................46
3.3.1. Choice of case companies and access ....................................................46
3.3.2. Respondents ...........................................................................................48
3.3.3. Interviewing.............................................................................................51
3.3.4. Additional sources of data ..................................................................... 53
3.4. Data analysis ....................................................................................................... 53
3.4.1. Letting the data speak ............................................................................ 54

4 WITHIN-CASE DESCRIPTION AND ANALYSIS ................................. 56

4.1. Alpha acquires Bravo and becomes Charlie....................................................... 56
4.1.1. Alpha’s pre-integration HR function..................................................... 57
4.1.2. Bravo’s pre-integration HR function ..................................................... 58
4.1.3. Integration.............................................................................................. 59
4.1.4. Post-integration...................................................................................... 61
4.1.5. Analysis of case Charlie.......................................................................... 62
4.1.5.1. Alpha pre-merger HR roles .................................................... 63
4.1.5.2. Alpha pre-merger influencing factors .................................... 63
4.1.5.3. Bravo pre-merger HR roles ....................................................64
4.1.5.4. Bravo pre-merger influencing factors ....................................66
4.1.5.5. Charlie post-merger HR roles ................................................66
4.1.5.6. Charlie post-merger influencing factors ................................ 67
4.2. Delta and Echo merge to become DeltaEcho..................................................... 70
4.2.1. Delta’s pre-integration HR function...................................................... 70
4.2.2. Echo’s pre-integration HR function .......................................................71
4.2.3. Integration...............................................................................................71
4.2.4. Post-integration...................................................................................... 73
4.2.5. Analysis of case DeltaEcho..................................................................... 74
4.2.5.1. Echo pre-merger HR roles...................................................... 74
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4.2.5.2. Echo pre-merger influencing factors ..................................... 75

4.2.5.3. DeltaEcho post-merger HR roles ........................................... 76
4.2.5.4. DeltaEcho post-merger influencing factors ........................... 77
4.3. Foxtrot and Golf create Hotel............................................................................. 79
4.3.1. Foxtrot’s pre-integration HR function ..................................................80
4.3.2. Golf’s pre-integration HR function........................................................ 81
4.3.3. Integration.............................................................................................. 81
4.3.4. Post-integration......................................................................................82
4.3.5. Analysis of case Hotel.............................................................................83
4.3.5.1. Foxtrot pre-merger HR roles..................................................83
4.3.5.2. Foxtrot pre-merger influencing factors .................................84
4.3.5.3. Golf pre-merger HR roles ....................................................... 85
4.3.5.4. Golf pre-merger influencing factors....................................... 85
4.3.5.5. Hotel post-merger HR roles ...................................................86
4.3.5.6. Hotel post-merger influencing factors ................................... 87
4.4. India and Juliet merge to create India-Juliet ....................................................89
4.4.1. India’s pre-integration HR function......................................................89
4.4.2. Juliet’s pre-integration HR function .....................................................90
4.4.3. Integration..............................................................................................90
4.4.4. Post-integration and demerger.............................................................. 92
4.4.5. Post-demerger India .............................................................................. 92
4.4.6. Post-demerger Juliet.............................................................................. 93
4.4.7. Analysis of case India-Juliet .................................................................. 93
4.4.7.1. India pre-merger and post-demerger HR roles..................... 93
4.4.7.2. India pre-merger and post-demerger influencing factors.....94
4.4.7.3. Juliet pre-merger and post-demerger HR roles .................... 95
4.4.7.4. Juliet pre-merger and post-demerger influencing factors ....96
4.5. Kilo and Lima merge to create KiloLima ...........................................................98
4.5.1. Kilo’s pre-integration HR function........................................................98
4.5.2. Lima’s pre-integration HR function ......................................................99
4.5.3. Integration............................................................................................ 100
4.5.4. Post-integration.....................................................................................101
4.5.5. Analysis of case KiloLima .................................................................... 102
4.5.5.1. Kilo pre-merger HR roles ..................................................... 102
4.5.5.2. Kilo pre-merger influencing factors ..................................... 102
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4.5.5.3. Lima pre-merger HR roles ................................................... 103

4.5.5.4. Lima pre-merger influencing factors ................................... 104
4.5.5.5. KiloLima post-merger HR roles ........................................... 105
4.5.5.6. KiloLima post-merger influencing factors........................... 105
4.6. Mike and November merge to become MikeNovember.................................. 108
4.6.1. Mike’s pre-integration HR function .................................................... 108
4.6.2. November’s pre-integration HR function ........................................... 109
4.6.3. Integration............................................................................................ 109
4.6.4. Post-integration..................................................................................... 111
4.6.5. Analysis of case MikeNovember ...........................................................112
4.6.5.1. Mike pre-merger HR roles.....................................................112
4.6.5.2. Mike pre-merger influencing factors ....................................113
4.6.5.3. November pre-merger HR roles............................................113
4.6.5.4. November pre-merger influencing factors ...........................114
4.6.5.5. MikeNovember post-merger HR roles.................................. 115
4.6.5.6. MikeNovember post-merger influencing factors .................116
4.7. Oscar acquires Papa and becomes OscarPapa..................................................118
4.7.1. Oscar’s pre-integration HR function ....................................................118
4.7.2. Papa’s pre-integration HR function .....................................................119
4.7.3. Integration.............................................................................................119
4.7.4. Post-integration.................................................................................... 120
4.7.5. Analysis of case OscarPapa .................................................................. 120
4.7.5.1. Oscar pre-merger HR roles .................................................. 120
4.7.5.2. Oscar pre-merger influencing factors ...................................121
4.7.5.3. Papa pre-merger HR roles.................................................... 122
4.7.5.4. Papa pre-merger influencing factors.................................... 122
4.7.5.5. OscarPapa post-merger HR roles......................................... 123
4.7.5.6. OscarPapa post-merger influencing factors ........................ 124
4.8. Quebec acquires Romeo and forms QuebecRomeo......................................... 126
4.8.1. Quebec’s pre-integration HR function ................................................ 126
4.8.2. Romeo’s pre-integration HR function..................................................127
4.8.3. Integration............................................................................................ 128
4.8.4. Post-integration.................................................................................... 129
4.8.5. Analysis of case QuebecRomeo............................................................ 130
4.8.5.1. Quebec pre-merger HR roles................................................ 130
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4.8.5.2. Quebec pre-merger influencing factors ................................131

4.8.5.3. Romeo pre-merger HR roles ................................................ 132
4.8.5.4. Romeo pre-merger influencing factors ................................ 133
4.8.5.5. QuebecRomeo post-merger HR roles .................................. 133
4.8.5.6. QuebecRomeo post-merger influencing factors .................. 134
4.9. Sierra and Tango merge to become SierraTango ............................................ 136
4.9.1. Sierra’s pre-integration HR function................................................... 136
4.9.2. Tango’s pre-integration HR function ...................................................137
4.9.3. Integration.............................................................................................137
4.9.4. Post-integration.................................................................................... 138
4.9.5. Analysis of case SierraTango ............................................................... 140
4.9.5.1. Sierra pre-merger HR roles .................................................. 140
4.9.5.2. Sierra pre-merger influencing factors...................................141
4.9.5.3. Tango pre-merger HR roles...................................................141
4.9.5.4. Tango pre-merger influencing factors ................................. 142
4.9.5.5. SierraTango post-merger HR roles ...................................... 142
4.9.5.6. SierraTango post-merger influencing factors ...................... 143
4.10. Uniform and Victor merge to become UniVic ..................................................147
4.10.1. Uniform’s pre-integration HR function ...............................................147
4.10.2. Victor’s pre-integration HR function .................................................. 148
4.10.3. Integration............................................................................................ 148
4.10.4. Post-integration.................................................................................... 149
4.10.5. Analysis of case UniVic ........................................................................ 149
4.10.5.1. Uniform pre-merger HR roles.............................................. 149
4.10.5.2. Uniform pre-merger influencing factor ............................... 150
4.10.5.3. Victor pre-merger HR roles................................................... 151
4.10.5.4. Victor pre-merger influencing factors................................... 151
4.10.5.5. UniVic post-merger HR roles ............................................... 152
4.10.5.6. UniVic post-merger influencing factors............................... 153
4.11. Four organisations that lack merger experience ............................................. 154
4.11.1. Whiskey’s HR function......................................................................... 154
4.11.1.1. Whiskey early HR roles .........................................................155
4.11.1.2. Whiskey early influencing factors ........................................ 156
4.11.1.3. Whiskey current HR roles .................................................... 156
4.11.1.4. Whiskey current influencing factors .....................................157
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4.11.2. X-ray’s HR function ............................................................................. 158

4.11.2.1. X-ray early HR roles ............................................................. 160
4.11.2.2. X-ray early influencing factors ............................................. 160
4.11.2.3. X-ray current HR roles ..........................................................161
4.11.2.4. X-ray current influencing factors ..........................................161
4.11.3. Yankee’s HR function........................................................................... 162
4.11.3.1. Yankee early HR roles........................................................... 163
4.11.3.2. Yankee early influencing factors .......................................... 164
4.11.3.3. Yankee current HR roles ...................................................... 164
4.11.3.4. Yankee current influencing factors ...................................... 165
4.11.4. Zulu’s HR function ............................................................................... 166
4.11.4.1. Zulu early and current HR roles........................................... 166
4.11.4.2. Zulu early and current influencing factors .......................... 167

5 CROSS-CASE ANALYSIS ..................................................................... 169

5.1. HR roles ............................................................................................................ 169
5.2. Influencing factors .............................................................................................173
5.2.1. The outer context ..................................................................................174
5.2.2. The inner context ................................................................................. 176
5.2.2.1. Organisational factors .......................................................... 176
5.2.2.2. Individual factors.................................................................. 178
5.2.3. The merger context .............................................................................. 178
5.2.4. Summary of influencing factors............................................................181
5.3. The development of the HR function............................................................... 184
5.3.1. The employee advocate ........................................................................ 184
5.3.2. The business partner............................................................................ 187
5.3.3. The negotiating lawyer......................................................................... 190
5.3.4. The strategy implementer .................................................................... 193
5.3.5. The process engineer............................................................................ 195
5.3.6. Summary of the development of the HR function .............................. 197
5.4. Comparative analyses ....................................................................................... 199
5.4.1. Comparison of differences in nationality ............................................ 199
5.4.2. Comparison of developments in mergers and non-mergers ............. 200
5.5. The applicability of the conceptual framework ...............................................204
5.6. The emergence of a new model ........................................................................206
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6 CONCLUSIONS .................................................................................... 216

6.1. General conclusions.......................................................................................... 216
6.2. Limitations and implications ........................................................................... 219
6.2.1. Limitations ........................................................................................... 219
6.2.2. Implications for future research .......................................................... 221
6.2.3. Practical implications...........................................................................222

REFERENCES ..........................................................................................224

APPENDICES
Appendix 1 Interview Guide (Pilot Study) .............................................................. 237

Appendix 2 Interview Guide (Mergers)...................................................................238

Appendix 3 Interview guide (Non-mergers) ...........................................................240

TABLES
Table 1 Tyson and Fell’s three models of personnel management (adapted from
Tyson and Fell 1986:27) ...................................................................................11

Table 2 Monks’ Personnel Management Practice Framework (adapted from

Monks 1993)..................................................................................................... 14

Table 3 The evolution of HR roles during the last decade (adapted from Ulrich
and Brockbank 2005a) .................................................................................... 18

Table 4 Five proposed roles .......................................................................................... 29

Table 5 Summary of influencing factors ...................................................................... 41

Table 6 The research process........................................................................................ 45

Table 7 Case organisation criteria ................................................................................ 47

Table 8 The respondents...............................................................................................50

Table 9 Milestones of the Charlie merger .................................................................... 57

Table 10 Factors influencing the roles of the Alpha pre-merger HR function .............64
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Table 11 Factors influencing the roles of the Bravo pre-merger HR function .............66

Table 12 Factors influencing the roles of the Charlie post-merger HR function .........69

Table 13 Milestones of the DeltaEcho merger ............................................................... 70

Table 14 Factors influencing the roles of the Echo pre-merger HR function............... 76

Table 15 Factors influencing the role of the DeltaEcho post-merger HR function...... 78

Table 16 Milestones of the Hotel merger ....................................................................... 79

Table 17 Factors influencing the roles of the Foxtrot pre-merger HR function...........84

Table 18 Factors influencing the roles of the Golf pre-merger HR function ................86

Table 19 Factors influencing the roles of the Hotel post-merger HR function ............88

Table 20 Milestones of the India-Juliet merger.............................................................89

Table 21 Factors influencing the roles of the India HR function.................................. 95

Table 22 Factors influencing the roles of the Juliet HR function ................................. 97

Table 23 Milestones of the KiloLima merger .................................................................98

Table 24 Factors influencing the roles of the Kilo pre-merger HR function .............. 103

Table 25 Factors influencing the roles of the Lima pre-merger HR function ............ 104

Table 26 Factors influencing the roles of the KiloLima post-merger HR function .... 107

Table 27 Milestones of the MikeNovember merger..................................................... 108

Table 28 Factors influencing the roles of the Mike pre-merger HR function..............113

Table 29 Factors influencing the roles of the November pre-merger HR function..... 115

Table 30 Factors influencing the roles of the post-merger MikeNovember HR

function ...........................................................................................................117

Table 31 Milestones of the OscarPapa merger .............................................................118

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Table 32 Factors influencing the roles of the Oscar pre-merger HR function ........... 122

Table 33 Factors influencing the roles of the Papa pre-merger HR function............. 123

Table 34 Factors influencing the roles of the OscarPapa post-merger HR function.. 125

Table 35 Milestones of the QuebecRomeo merger ...................................................... 126

Table 36 Factors influencing the roles of the Quebec pre-merger HR function......... 132

Table 37 Factors influencing the roles of the Romeo pre-merger HR function ......... 133

Table 38 Factors influencing the roles of the QuebecRomeo post-merger HR

function .......................................................................................................... 135

Table 39 Milestones of the SierraTango merger .......................................................... 136

Table 40 Factors influencing the roles of the Sierra pre-merger HR function ............141

Table 41 Factors influencing the roles of the Tango pre-merger HR function........... 142

Table 42 Factors influencing the roles of the SierraTango post-merger HR function146

Table 43 Milestones of the UniVic merger....................................................................147

Table 44 Factors influencing the roles of the Uniform pre-merger HR function....... 150

Table 45 Factors influencing the roles of the Victor pre-merger HR function........... 152

Table 46 Factors influencing the roles of the UniVic post-merger HR function ........ 153

Table 47 Milestones of the Whiskey case organisation during the studied decade.... 154

Table 48 Factors influencing the roles of the early Whiskey HR function ................. 156

Table 49 Factors influencing the roles of the current Whiskey HR function ............. 158

Table 50 Milestones of the X-ray case organisation during the studied decade ........ 158

Table 51 Factors influencing the roles of the early X-ray HR function ...................... 160

Table 52 Factors influencing the roles of the current X-ray HR function .................. 162
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Table 53 Milestones of the Yankee case organisation during the studied decade...... 162

Table 54 Factors influencing the roles of the early Yankee HR function.................... 164

Table 55 Factors influencing the roles of the current Yankee HR function ............... 165

Table 56 Milestones of the Zulu case organisation during the studied decade .......... 166

Table 57 Factors influencing the roles of the early and current Zulu HR function.... 167

Table 58 Most common factors influencing the role of the pre-merger HR function 182

Table 59 Most common factors influencing the role of the post-merger HR function182

Table 60 Summary of factors influencing the role of the HR function ....................... 183

Table 61 Summary of the impact of the influencing factors on the five HR roles...... 198

Table 62 The frequency of HR roles depending on nationality and phase of merger 200

FIGURES
Figure 1 Storey’s four types of personnel practitioners (adapted from Storey 1992).. 13

Figure 2 Ulrich’s multiple-role framework (adapted from Ulrich 1996)...................... 16

Figure 3 The proposed framework for HR functions .................................................... 26

Figure 4 Strategic change and HRM (Hendry and Pettigrew, 1990)............................30

Figure 5 The pre-understanding of the study................................................................40

Figure 6 The roles of the Alpha pre-merger HR function ............................................. 63

Figure 7 The roles of the Bravo pre-merger HR function ............................................. 65

Figure 8 The roles of the Charlie post-merger HR function ......................................... 67

Figure 9 The roles of the Echo pre-merger HR function .............................................. 75

Figure 10 The roles of the DeltaEcho post-merger HR function .................................... 76

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Figure 11 The roles of the Foxtrot pre-merger HR function ..........................................84

Figure 12 The roles of the Golf pre-merger HR function................................................ 85

Figure 13 The roles of the Hotel post-merger HR function ............................................86

Figure 14 The roles of the India pre-merger and post-demerger HR function..............94

Figure 15 The roles of the Juliet pre-merger and post-merger HR function .................96

Figure 16 The roles of the Kilo pre-merger HR function .............................................. 102

Figure 17 The roles of the Lima pre-merger HR function ............................................ 104

Figure 18 The roles of the KiloLima post-merger HR function.................................... 105

Figure 19 The roles of the Mike pre-merger HR function .............................................112

Figure 20 The roles of the November pre-merger HR function ....................................114

Figure 21 The roles of the post-merger MikeNovember HR function ..........................116

Figure 22 The roles of the Oscar pre-merger HR function ............................................121

Figure 23 The roles of the Papa pre-merger HR function............................................. 122

Figure 24 The roles of the OscarPapa post-merger HR function ................................. 124

Figure 25 The roles of the Quebec pre-merger HR function .........................................131

Figure 26 The roles of the Romeo pre-merger HR function ......................................... 132

Figure 27 The roles of the QuebecRomeo post-merger HR function ........................... 134

Figure 28 The roles of the Sierra pre-merger HR function........................................... 140

Figure 29 The roles of the Tango pre-merger HR function .......................................... 142

Figure 30 The roles of the SierraTango post-merger HR function............................... 143

Figure 31 The roles of the Uniform pre-merger HR function ...................................... 150

Figure 32 The roles of the Victor pre-merger HR function............................................ 151

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Figure 33 The roles of the UniVic post-merger HR function........................................ 152

Figure 34 The roles of the early Whiskey HR function ................................................. 156

Figure 35 The roles of the current Whiskey HR function ..............................................157

Figure 36 The roles of the early X-ray HR function ...................................................... 160

Figure 37 The roles of the current X-ray HR function ...................................................161

Figure 38 The roles of the early Yankee HR function ................................................... 164

Figure 39 The roles of the current Yankee HR function ............................................... 165

Figure 40 The roles of the early and current Zulu HR function ................................... 167

Figure 41 The frequency of roles in the pre-merger setting .......................................... 171

Figure 42 The frequency of roles in the post-merger setting.........................................172

Figure 43 Factors affecting the employee advocate role ............................................... 186

Figure 44 Factors affecting the business partner role................................................... 189

Figure 45 Factors affecting the negotiating lawyer role................................................ 192

Figure 46 Factors affecting the strategy implementer role........................................... 194

Figure 47 Factors affecting the process engineer role................................................... 196

Figure 48 The frequency of roles in the early stage non-merger setting ...................... 201

Figure 49 The frequency of roles in the current non-merger case setting ...................202

Figure 50 Role set theory in the context of the HR function ........................................208

Figure 51 The development of Charlie’s HR function................................................... 212

Figure 52 The development of KiloLima’s HR function ............................................... 213

Figure 53 The development of Hotel’s HR function ..................................................... 214

 1

1 INTRODUCTION

“This study examines the roles played by the human resource function in large
merging corporations.”

1.1. Background of the study

During recent years, human resource (HR) scholars, consultants and professionals have
extensively discussed the role and influence of the HR function in large companies.
They have presented a number of viewpoints on the pressures the HR function is
believed to be subject to and on the role the function should ideally play. On the one
hand, the HR function is seen to be under intense pressure to downsize and restructure
its traditional administrative HR processes for staffing, training, appraising, rewarding,
promoting and otherwise managing the flow of employees through the organisation. On
the other, scholars have called on the HR function to go beyond its traditional
operational and transactional role to make an important strategic contribution to how
the firm operates. Many observers have pointed to the potentially important role that
the HR function may take in terms of change management, while others have argued
that the HR function needs to carry some of the responsibility for management of
personnel commitment (Ulrich, 1996). However, observers have presented a number of
statements regarding HR’s deficient capability to perform. Titles like ‘Whose fault is it
anyway?’1, ‘New network offers a lifeline to HR’2, ‘What’s wrong with HRM’3 and
‘Aligning HR with the business: where is it all going wrong?’4 have featured in business
and management journals for decades. The sarcastic tone often used when discussing
the work of the HR function suggests a disbelief in HR's capability to perform.

Hence, the field of human resource management is filled with contradiction as there is
both an ongoing debate on the important roles HR should play, and a disbelief in HR’s
ability to contribute. One of the key questions is whether the HR function can manage
to develop its own role, to become more business-oriented, and thus make a bigger
contribution to company strategy and performance.

Considerable conceptual and empirical scholarly work has been done on the roles
played by the HR function. Authors (e.g. Ulrich 1996; Ulrich and Brockbank 2005a;
Storey 1992; Tyson and Fell 1986; Monks 1993) have presented a variety of conceptual
models but the debate about the empirical validity and usefulness of these models
continue (Caldwell 2003; Storey and Caldwell 2007). While few efforts have been made
to explain differences across firms in the roles played by the HR function, more efforts
have been made to draw upon organisational theory (OT) when discussing factors
affecting HRM in general (e.g. Wright and McMahan 1992). Organisational theory is an
extremely broad field, including a great number of perspectives and concepts well-
suited for research in HRM, such as the resource based view (Barney 1991; 1995),
institutional theory (DiMaggio and Powell 1983; 1991), contingency theory (Donaldson
1996) and social capital (Nahapiet and Ghoshal 1998). Most existing HRM studies deal
with only a small number of selected organisation theories. For instance Youndt et al.
(2004) discuss the impact of social capital on HRM, while Milliman et al. (1991) focus

1 Pettengell, T (2008) Personnel Today 6/10/2008, p 12.

2 Personnel Today 7/8/2003, p 4.
3 Zaleznik, A (1988) Harvard Business Review, Vol 66, No. 6, pp 170- 171.
4 Crail, M (2006) IRS Employment Review 3/24/2006 vol. 843, pp 8-13.
 2

on the link between organisational life cycles and HRM. This study takes a broader
perspective than most previous research within HRM. In studying the roles played by
the HR function I will analyse a range of potentially influencing factors that are
embedded in a variety of organisational theories.

The context chosen for this research on the HR function is large-scale mergers. The
number of such deals within the European Union has grown steadily and the increase
in mergers is likely to continue. Schweiger and Very (2001) argue that the number and
value of deals transacted worldwide will continue to rise as a consequence of for
instance deregulation, globalisation and technological change. Furthermore, they
emphasise the role of cross-border mergers, especially within Europe. The case
organisations of this study are large-scale domestic or international mergers, with the
parties originating from either Finland or Sweden.

In recent years, several large-scale cross-border mergers among companies in

European countries have taken place. In particular Finnish and Swedish organisations
have joined forces through mergers. In 1997 the shareholders of Merita accepted the
public offer from Nordbanken Holding, and the companies merged. MeritaNordbanken
became one of the leading banking groups in the Baltic region, with strong positions in
two home markets. Today Merita-Nordbanken is part of the Nordic financial institution
Nordea, into which several other Nordic financial institutions have merged. In 1999 the
Finnish Tieto and Swedish Enator proposed a merger of equals, which formed a new
group named TietoEnator that formed one of Europe's leading suppliers of professional
IT services5. In March 2002 the Swedish and Finnish telecommunications companies
Telia and Sonera announced plans to merge. The combination of the companies created
the leading telecommunications group in the Nordic and Baltic regions. Both the
Swedish and Finnish governments agreed to fully support the merger. In 2004 WM
Data and Novo Group formed a new entity WM Data Novo, as WM Data acquired Novo
Group6. These are just some of the many mergers taking place between Swedish and
Finnish corporations. Likewise, a number of large-scale Finnish domestic mergers have
taken place in recent years. For instance Metso was created through the merger of
Valmet and Rauma in 1999. The merger produced an equipment supplier serving the
global process industry7.

While early work on mergers and acquisitions (M&As) generally focused on financial
and strategic issues, in recent years there has been a surge in literature on HRM in
M&As (e.g. Bryson 2003; Schuler and Jackson 2001a; Schweiger et al. 1987; Faulkner
et al. 2002; Birkinshaw et al. 2000). It is today widely accepted that the way in which
people issues are handled is important for the success of M&As. Merging companies
need to integrate the different workforces and cultures of the merging organisations. To
the extent that integration processes are unsuccessful, they may lead to loss of key
personnel, lower employee productivity and reduced job satisfaction, communication
breakdowns, and resistance to change (Buono and Bowditch, 1989; Cartwright and
Cooper, 1993; Schweiger and Walsh, 1990). Cross-border M&As are particularly
challenging as national identification as well as delineation from other nationalities
play a crucial role in how employees make sense of the process following the merger
decisions (Calori et al., 1994; Gertsen et al., 1998; Olie, 1994). Ultimately, a lack of
socio-cultural integration may result in failures to reach the intended synergy benefits
of the merger. Schuler and Jackson (2001a) argue that neglect of HRM issues and

5 Since 2009 TietoEnator is known as Tieto.

6 The organisation has later been acquired by Logica.
7 The listed mergers are examples of mergers that are of interest for this study, however they are not equal

to the case sample.

 3

activities is one of the main reasons for failing mergers. Nevertheless, in practice
merging organisations rarely seem to emphasise HRM activities (Greengard 1999).
Several authors have discussed the inability of the HR function to win respect within
the organisation (see e.g. Wright, McMahan, Snell and Gerhart 2001) and according to
the literature (e.g. Schuler and Jackson, 2001a) the problem remains the same in
merging firms.

Mergers, which almost by definition imply change, create a dynamic setting for the HR
function to change its own role. Does the merger setting have such an impact on the HR
function that change occurs? Which aspects of the roles played by the HR function
change and what factors induce the change? Hence, I argue that mergers constitute a
setting of particular interest for studying how the roles of the HR function evolve. The
particular context of this study is mergers and not acquisitions, even though these
terms are often used, if not synonymously, at least together. (For further definitions of
the terminology see section 1.5.)

1.2. The HR function in M&As

Academic articles addressing the role of the HR function in M&As are scarce.
Theoretical papers have been written by e.g. Aguilera and Dencker (2004). The number
of published empirical studies appears to be even lower. While several studies have
been conducted on the role and influence of the HR function in large firms (e.g.,
Conner and Ulrich, 1996; Galang and Ferris, 1997; Wright et al., 2001), published
research on this issue in the context of large-scale M&As is scarce. Nonetheless, several
authors have touched upon the issue and for instance Schuler and Jackson (2001a)
suggest that M&A management should be a core competency for the HR function;
however, HR professionals still need to prove their worth in order to gain a more
central role in the M&A process. Björkman and Søderberg (2006) have analysed the
roles played by the HR function within Nordea, the financial institution that was
created through several consecutive Nordic mergers and acquisitions. According to
their findings the HR function readily plays a non-strategic role in M&As. Antila (2006)
as well as Antila and Kakkonen (2008) have, based on a small case sample, explored
the relationship between HR managers and M&A’s. They point out the need for further
empirical research of the factors affecting the roles of HR. Hence, there is a gap in the
literature regarding the ‘how’, the ‘what’ and the ‘why’ of the HR function in connection
with M&As, which earns to be addressed.

1.3. Purpose and research questions

The purpose of the thesis is to examine the roles played by the HR function in the
context of mergers and thus to understand what happens with the HR function in such
a change environment, and to shed light on the underlying factors embedded in
different organisation theories that influence the changes in the HR function.

The aim of the study can furthermore be divided into two sub-purposes. The first part is
descriptive, aiming at describing the changes that occur within the HR function during
a merger. The study builds on previous studies that outline the roles of the HR function
(Tyson and Fell 1986; Storey 1992; Monks 1993, Ulrich 1996, Ulrich and Brockbank
2005a). The first research question posed is the following:
 4

x What are the roles played by the HR function before the merger, and after
the merger?

The other sub-purpose is explorative and aims at identifying factors that affect HR roles
and role change, using a contingency perspective. The research question linked to this
latter purpose is the following:

x Which factors affect the roles played by the HR function?

As a demarcation, it is to be noted that the study does not examine in detail the HRM
practices of the merging corporations, but rather limits itself to the perceptions held by
central actors of the roles played by the HR function.

Another restriction is linked to my research approach. Instead of choosing one or a

limited number of theoretical perspectives on which to build the study (see e.g. Truss,
2009), I built a conceptual framework based on the extensive number of influencing
factors identified in previous work. I further remained open to additional factors and
patterns emerging from the data. This allowed me to build on the diverse contributions
that have already been made to the literature on HR department roles while remaining
sensitive to the possible new findings that may emerge from this study on the context of
M&As.

1.4. Definitions

HRM scholars have extensively used the term HR function, however, often without
offering a proper definition. Schuler (1995:25) defines it as a set of activities, practices,
roles, responsibilities, and structures in an organisation concerned with HR
management that may be carried out by any and all employees both managers and
non-managers. Nevertheless, in most studies only HR managers and staff are included
in the concept. In the HRM literature, the term HR function is often used
synonymously with HR department, meaning the personnel management handled by
HR professionals. In my definition of the HR function, I like to make a clear distinction
between HR staff on one hand and line managers on the other. All people included in
the HR function work with people issues and, therefore, I argue that other managers
are not part of the HR function per se. Nonetheless, they might be, and preferably are,
involved in the management of human resources. Also, I wish to keep the terms
function and department separate because the term function, to the best of my
understanding, contains the work of the HR staff, leaving out the reference to a
particular address, which is included in the term department. Also, the term HR
function includes the sum of all HR managers, HR staff, and HR departments within an
organisation.

Therefore, my definition of the HR function is as follows: All HRM activities, practices,

roles, departments, responsibilities, and structures carried out or enforced by people
employed explicitly for the purpose of managing and administrating HR issues.

The difference between the terms personnel management, which has been widely used
in the past, and human resource management, a concept that since the 1980’s has
gained increasing attention, is further discussed in chapter 2.2.

Mergers as a context were discussed in section 1.3. The definition used in my study is as
follows: A merger takes place when two more or less equally sized firms join forces in
 5

order to become a single organisation. Haspeslagh and Jemison (1991) have defined a
merger as a fusion of two organisations creating one new entity. An acquisition on the
other hand implies that one firm is buying and taking the lead of another firm. An
acquisition is defined as the purchase of one organisation (i.e. of sufficient shares to
gain control) by another organisation (ibid.). Regardless of their differences these two
types of deals create the concept ‘mergers and acquisitions’. Legal and financial experts
tend to argue that true mergers rarely take place. Almost every single deal is legally an
acquisition, consisting of a buying party purchasing the shares of the selling party.
Nevertheless, in several cases the message communicated by management to
employees and company stakeholders is that the deal in terms of integration, values
and emotions is a merger, not to say a merger of equals. Hence, the legal and
emotional/perceived definitions do not always correlate. In this thesis deals that have
either been presented as mergers by the top management or are by central actors to this
study perceived as mergers are defined as such, regardless of legal and economical
facts.

1.5. Research approach

This section will give a brief introduction to the research approach of the study, leaving
a more thorough discussion to the method chapter (chapter 3).

The study is mainly based on research on the role of the HR function, and thus builds
upon work within HRM. Traditionally, research in HRM takes a modernist and
positivist approach (Townley, 1993). With a realist view, which holds that there is a real
world to discover even though it is only imperfectly apprehensible (Healy and Perry,
2000), I consider my research perspective to fit within the boundaries of the traditional
HRM perspective. The starting point of this research is conventional in its view on text
as a reflection of reality. The pre-understanding of the study is embedded in the
existing literature and prior research that is relevant for the thesis. Moreover, an
abductive element is added to the research thanks to the pre-study8.

My thesis is influenced by positivist researchers, and my theoretical pre-understanding

derives from the field of human resource management as well as international business
As a consequence of the explorative nature of this study, the method I have chosen to
use is qualitative.

The data is based on interviews focusing on how HR professionals on the one hand and
members of the top executive management team on the other hand regard the role and
work of the HR function. These are central corporate actors whose perception of the
HR function is the most relevant.

1.6. Structure of the thesis

This thesis contains six chapters. After this introductory chapter, the literature review
is presented in chapter two. The theorisation of the research area is two-fold. First,
possible role formulations for the HR function are discussed. Based on previous
research a framework consisting of five roles for the HR function is proposed. The
framework serves as my pre-understanding when conducting the field work. Second,

8A pilot study was carried out at an early stage of the research. For more information on the pilot study see
section 3.2.
 6

factors that might influence the role formulation of the HR function are listed.
Thereafter, the third chapter discusses the methodological choices made. The ten
merger case organisations as well as the four matching non-merger cases are described
and analysed in chapter four. In chapter five a cross-case analysis is made. First, HR
roles are identified, second, influencing factors are identified and thirdly a discussion
about how the roles and influencing factors are related to each other is made,
discussing the development that takes place within the HR function. Chapter six
concludes the thesis with a discussion on implications, limitations, and moreover
suggestions for further research.
 7

2 PREVIOUS RESEARCH

This second chapter of the thesis presents the theoretical pre-understanding of the
study. The literature has been reviewed prior to conducting the field work. The chapter
begins (2.1) with an introduction to the scholarly debate on HRM, including a
discussion on the meaning and understanding of the term role, in relation to the HR
function. Next (2.2) it continues with a discussion on frameworks for HRM, including a
description of five specific frameworks. A new theoretical framework, which serves as
my pre-understanding when conducting the fieldwork, is presented in section 2.3.
Section 2.4 elaborates on previous research, presenting the scarce research evidence on
role changes within the HR function in general. It also reflects upon the role of the HR
function in change management. Thereafter, the factors that may influence the HR
roles are discussed (2.5). The main points of the chapter are summarised in section 2.6.

2.1. HRM and the role of the HR function

The field of HRM is a contested terrain. After the introduction of HRM in the 1980s,
European scholars began debating how the concept fits into the prevailing
understanding of the management of the employment relationship (Keenoy 1990).
Some early commentators argued that there is only limited if any substantive difference
between personnel management and HRM (see e.g. Guest 1987:506; Armstrong 1987).

More recently attention has been drawn to the increasingly fragmented role of the HR
function. Caldwell and Storey (2007) argue that the complexity and level of disorder in
HR processes are increasing. While Caldwell and Storey (2007:21) argue that the
exploration of the HR function still remains a controversial territory, Scullion et al.
(2007) have an optimistic view on HRM arguing that there has been a significant
development in HRM over the past two decades, and that the field today is viewed as
vibrant and diverse in a positive sense.

Moving further from a general discussion on HRM to the specific focus of the study
which is the HR function, it can be noted that in the HRM literature, different roles of
the HR function have extensively been discussed. Ulrich frequently (1996; 1998; Ulrich
and Brockbank 2005a; 2005b; Ulrich and Beatty 2001; Conner and Ulrich 1996) writes
about the different roles HR professionals need to play. Others discussing the varieties
of HR roles are for instance Kelly (2001); Schuler and Jackson (2001b); Guest and King
(2004); Procter and Currie (1999); and Caldwell (2001). The changing roles of
personnel managers have also intrigued several scholars, among others Caldwell
(2003); Scullion and Starkey (2000); Novicevic and Harvey (2001); Sahdev,
Vinnicombe and Tyson (1999); and Hiltrop, Despres and Sparrow (1995).

Regardless of the frequent use of the term ‘HR roles’, few scholars clearly define it, and
the use of the term remains loose and vague. One welcomed exception is the article by
Truss et al. (2002) on the changing role of the HR function, which draws on role-set
theory. In lines with the argumentation above, Truss and associates (2002) note that
the word ‘role’ is used invariably in the HR context, but without any link to individual
role theory. Thus, referring to Lichtman’s and Hunt’s (1975) work, they point out that
role theory suggests that roles played by individuals or departments consisting of
individuals are contingent on the expectations that others have about the rights and
duties associated with that role. In this case others refer to all those people who have a
stake in the activities of the focal individual / department, as they constitute the
 8

individual’s/ department’s role-set. Originally role set theory focused on the individual
level, but in the article by Truss and associates (2002) the general understanding of the
theory is extended and it is argued that the HR function (which consists of individuals)
can be considered within the context of an extension of role-set theory. They suggest
that the roles played by the function are socially constructed through the perceptions
and attitudes of role-set members. Based on these arguments they suggest that a role is
maintained by the sets of role expectations held by other organisational actors
concerning what the ‘focal person/department’ should do in order to fulfil the role
effectively (Truss et al., 2002). Truss and associates (2002) build on the work of Katz
and Kahn (1978). Katz and Kahn (1978:219) proposed the concept of role as the major
means for linking the individual and organisational levels of research and theory. I
concur with the argumentation above, and hence this study follows the view on roles as
socially constructed.

2.2. Frameworks for HRM

In addition to being dependent on the expectations of its role-set, each HR role consists
of a certain set of HR activities. The activities associated with the HR function are
numerous, including among others: recruiting; staffing; managing and/or
administrating compensation and benefits; managing employee welfare; supervising
industrial relations; training and development. As this study examines the roles of the
HR function, a framework outlining the different roles generally undertaken by the HR
function would be useful. In other words there is a need to group or cluster the HR
activities associated with the different HR roles. The clustering serves as a tool for
analysing the HR function from a role perspective.

As Ulrich and Brockbank (2005a) argue, the HRM field is broad, encompassing a large
number of terms and concepts for the HR role. Several attempts have been made to
distinguish between different roles and clarify the kind of activities that are linked to
the different roles and thus to clarify the terminology. In 1986, Tyson and Fell
distinguished three models for personnel management. Storey published a two
dimensional framework for personnel management in 1992. Monks (1993) also
contributed to the European discussion on PM/HR models. In the U.S., Ulrich (1996)
distinguished four roles for the HR function, and later (2005a) together with
Brockbank extended the framework to embrace five roles. These five frameworks will
form the foundation of this study, and will be discussed in more detail in sections 2.2.1-
2.2.5.

Also other scholars such as Wilkinson and Marchington (1994) and Wright et al. (2001)
have added to the HR role discussion. The reasons for choosing the five above
mentioned frameworks as a point of departure for this study are several. Tyson and
Fell’s (1986) work is a classic, cited by numerous scholars, as is Storey (1992). Ulrich’s
work from 1996 is one of the most cited normative models for HR roles. Monks’
empirical work from 1993 is the least known model of the chosen ones, but as it differs
from the other models in terms of construct it was regarded an important complement
to the pre-understanding of the study. Ulrich and Brockbank’s work (2005a) was added
to the list as it develops and restructures Ulrich’s 1996 model. Thus it is argued that the
five chosen models together constitute a sound base for the pre-understanding of HR
roles.
 9

The frameworks presented in this chapter do not only differ in terms of construction,
but also in terms of the terminology used. Some major differences will be noted prior to
presenting the frameworks in further detail.

Models, roles and types. A unifying feature of the frameworks is the aim to map the
work of the HR function into distinctly different groups. They all distinguish between a
number of sets of activities. These groups or sets are however labelled differently,
namely as models, roles and types. From the point of view of this thesis, models, roles
and types can be regarded as synonyms. However, the differing terminology does imply
some differences across the frameworks. Generally, only one model at a time can be
present, while roles, on the contrary, may be undertaken side by side in varying
proportions. Nonetheless, there are no strict boundaries and there certainly are
exceptions to this generalisation.

Personnel management and Human Resource Management. The frameworks

presented below differ from each other regarding HRM terminology. In the first three
works the emphasis is on personnel management, while the two latest discuss HRM.
Despite the different wording, all five frameworks discuss the same topic, which is the
activities taken care of by what is today widely known as the HR function. The variation
is mainly a consequence of the shift in terminology which has taken place during the
last two decades.

In 1987 Guest argued that HRM should be defined in such a way as to differentiate it
from traditional personnel management. He further outlined three ways of defining
HRM. According to the first approach, HRM was perceived only as a new title for
personnel management. The second approach suggested that HRM is a re-
conceptualisation of personnel management. The third approach argued that HRM is
distinctively different from personnel management and included a new approach for
management.

Almost twenty years later, the general understanding is that HRM is more than
personnel management. It implies more strategic thinking and greater involvement in
business. However, the term HRM is also broadly used when referring to routine
personnel management tasks (as in Ulrich 1998).

This study follows the latest trends. The terms personnel management and personnel
function are used only when referring to old publications. HRM, which is defined as the
management of people in organisations as effectively as possible for the good of the
employees, the company and society (Schuler, 1995:5), is used as an umbrella term
including both strategic and non strategic activities.

Individual versus group level. An additional difference between the frameworks

below is the focus on practitioners/professionals on the one hand and
management/function on the other hand. This study argues that the function, as it
consists of individuals, is to be regarded as a group of professionals. Hence, the
research focuses of the previous frameworks are either on a single individual or on a
group of individuals, which makes the difference between the two research foci seem
less distinct. Therefore, a framework outlining the work of HR professionals is as
applicable to this study as a framework outlining personnel management.
 10

2.2.1. Tyson’s and Fell’s building industry metaphor

Tyson and Fell (1986) distinguished three models traditionally undertaken by the
personnel function, namely (1) the clerk of works, (2) the contracts manger and (3) the
architect – all stemming from the building industry metaphor. In their book they talk
about different models. Hence, according to the Tyson and Fell framework a personnel
function is true to one model at a time, and does not play several roles simultaneously.
They argue that the models can be thought of as ‘ideal types’ in the Weberian sense
(Tyson 1987).

Clerk of works. The clerk-of-works model refers to an administrative support

activity, with no involvement in business planning. The principle activities for the
personnel staff is basic routine matters such as assisting in recruitment tasks, record
keeping, preparing letters and documents on instructions, and welfare. The personnel
system in the clerk-of-works model is created in an ad hoc way. Systems generated for
financial information such as payroll, head count and performance against budget, are
likely to be emphasised. (Tyson and Fell, 1986)

Contracts manager. The contracts managers are experts in trade union agreements,
and in fixing day-to-day issues with the unions. The main activity is likely to be the
making and interpretation of procedures and agreements. Furthermore, contracts
managers respond in a reactive way to problems and their planning horizon is short
term. This model is typically found in the industries employing blue-collar workers and
thus heavily penetrated by trade unions. (Tyson and Fell, 1986)

Architect. Architects aim at contributing to the success of the business, by helping to

create and build the organisation as a whole. An architect is a long-term designer and
planner, who adopts a creative, flexible and mindful attitude to the need for change.
Tyson and Fell argue that a key characteristic of the architect model is that the
personnel executives take the management of change, and the use of social science
techniques to be the cornerstone of their approach. The architect is furthermore likely
to be a member of the senior management team. (Tyson and Fell, 1986).
 11

Table 1 Tyson and Fell’s three models of personnel management (adapted from Tyson and
Fell 1986:27)

Clerk of works Contracts manager The architect

Policies Not pre set nor integral to Well established, often Explicit policies giving effect to
the ‘business’. Stem from implicit, heavy IR the corporate plan, concept of
chief executive. emphasis. HR planning.
Policy / Short-term, immediate. Short-term, possibly one to View of tactical and strategic
planning Emphasis on budgets, not two years. horizons. Interpretation of
horizon on corporate plans. corporate and HR plans.
Authority Vested in line managers. Vested in line managers, Personnel presence at highest
personnel authority as levels, people as ‘business’
‘agent’. resources.
Control Line managers wholly High trade union density, Personnel and line managers
control subordinates. senior managers and local move towards extensive
Only modifying shop steward/full time integration.
influence: higher line official connivance.
managers.
Systems Ad hoc, related to legal Will be sophisticated Tend to be sophisticated,
requirements. Payroll systems usually to help with procedurised. Concepts of HR
based. negotiations, and manuals planning, manpower
of rules etc. Personnel information system extensive.
systems probably work
efficiently.
Personnel Largely routine, person Support to line Personnel manager sees himself
activities not business centred. management; degree of as a business manager, looks
Routine administration, independence on highly for business opportunities,
welfare, selection of local issues; high which make maximum use of
junior staff. interpretative role; involved people skills available:
in formal relationships but Technically competent and
not power-broking. skills in diagnostic techniques.
Personnel To line manager. Likely to line manager, but To the chief executive.
reporting possibly to chief executive.
Personnel From another post likely Junior personnel staff still Both ‘full-time’ career
career path on promotion, e.g. wages drawn from other functions, professionals and a sufficiently
clerk, senior secretary, more senior staff start to high status function to attract
training instructor. become professional line managers permanently or
specialists. for a spell.

Tyson and Fell (1986) state that one of the main reasons for writing their book is their
belief that personnel managers need to rethink their role. The formulation of the
framework builds on both previous academic research, referring to a number of
academic publications, and on fieldwork. Without further specifying the fieldwork,
Tyson and Fell acknowledge the help from a number of company chairmen and chief
executives for responding to the authors’ enquiries (ibid.).

Storey (1992) argues that in the Tyson and Fell typology, which focuses on a continuum
of ‘low-discretion’ to ‘high-discretion’, i.e. from least to the most strategic, there is a
strong implication that the architect model is the more sophisticated approach.
Furthermore, Storey (1992) states that Tyson and Fell argue implicitly that there has
been an evolution towards the architect model.

As good frameworks are generally characterised by simplicity, Tyson and Fell (1986)
are successful in the sense that they describe the HR function with only three models.
Nevertheless, their framework has been criticised for being too simplistic, and the
linearity building upon one single dimension is regarded as a limitation (Truss et al.
2002; Caldwell 2001). Thus, it seems that Tyson’s and Fell’s three models are not
enough to describe the differing tasks and activities of the HR function today. Also, as
the HR function is argued to be in constant transformation, it should be able to play
 12

varying roles simultaneously. An important strength is the empirical work which the
framework is based on.

The Tyson and Fell framework might not have reached HRM practitioners to the same
extent as the Ulrich framework9 has, but among academics – especially Europeans – it
has become a classic still referred to ten and fifteen years after its publication (e.g.
Caldwell 2003; Gratton et al. 1999; Hope Hailey et al. 1997; Monks 1993; Sisson 1995;
Storey 1992).

Research building on the Tyson and Fell typology has in one occasion suggested a need
for a fourth model (Monks 1993)10, and in another that the contracts manager and the
architect still are enacted while the clerk of works model has disappeared (Hope Hailey
et al. 1997).

2.2.2. Storey’s four types of personnel practitioners

Based on empirical research conducted during 1986-1988, Storey (1992) proposed a

typology for personnel management. The research was carried out as case studies in 15
UK companies, both privately and publicly owned. On the basis of two dimensions,
namely intervention vs. non-intervention and strategy vs. tactics he defined four types.
These are: (1) Advisers, (2) Handmaidens, (3) Regulators, and (4) Changemakers.

Advisers. Advisers act as internal consultants offering expertise and advice to line
management, while not getting essentially involved in the affairs of others.

Handmaidens. Likewise, handmaidens operate in a mainly non-interventionist

manner, while providing line management with specific non-strategic services. They
are primarily engaged in servicing the routine requirements of the line, by e.g. fulfilling
a clerical and welfare function. The role may include doing initial selection screening
and maintaining record systems for absence, sickness and pay, as well as visiting sick
employees and being available for advice.

Regulators. Regulators are occupied with the formulation and promulgation of

employment rules and industrial relations policies. This role is seen as traditional and
tactical, demanding intervention. Regulators represent the classic industrial relations
(IR) manager, who is responsible for devising, negotiating and defending the
procedural and substantive rules which govern employment relations.

Changemakers. Changemakers are interventionists with a strategic agenda. Storey

argued that the changemakers were the ones most in tune with HRM initiatives, which
at the time of the study were regarded as novel.

9 See chapter 2.2.4

10 See chapter 2.2.3
 13

Strategic

Changemakers Advisers

Interventionary Non-interventionary

Regulators Handmaidens

Tactical

Figure 1 Storey’s four types of personnel practitioners (adapted from Storey 1992)

Alike the Tyson and Fell typology, Storey’s framework has been acknowledged by
European scholars (e.g. Hoque and Noon 2001; Gratton et al. 1999; Hope Hailey et al.
1997; Hope Hailey 2001; Caldwell 2003).

Caldwell (2003) re-examined Storey’s typology and concluded that much of its
empirical accuracy had been lost. He argued that the typology has essential weaknesses,
as it does not capture the increasing empirical complexity and multi-faceted nature of
HR roles.

Storey’s work has also been criticised by Legge (1995) who argues that Storey’s ideal
types are normative, while the empirical descriptions mainly support the traditional
and less sophisticated types of personnel management (Hoque and Noon 2001). Hope
Hailey et al. (1997) note that the data collection took place in the 1980’s, arguing that a
shift towards more sophisticated HRM might have taken place since then.

2.2.3. Monks’ four models of personnel management

Monks’ (1993) framework is based on findings of research carried out in Ireland in

1989 and 1990. The data collection was carried out in two main phases. First, using a
postal questionnaire data was gathered in 97 firms. Second, the survey was followed up
by interviews in thirty of these organisations. The sample was characterised by
diversity, however not random, as the empirical study covered both private and public
companies involved in service as well as in manufacturing, being either domestic or
foreign owned.

Monks found strong similarities with the Tyson and Fell framework (1986), but still felt
that their three-tiered approach was not sufficient to describe all types of practices that
emerged from her survey. Hence, she expanded the framework to become a fourfold
model, including the following groups: (1) Traditional/Administrative; (2)
Traditional/Industrial Relations; (3) Innovative/Professional; and (4)
Innovative/Sophisticated.

Traditional/Administrative. The first approach to personnel management

distinguished by Monks reminds of ‘housekeeping’. It is a support function with a focus
on administrative matters and record keeping. Its main purpose is to ensure adherence
 14

to rules and regulations. Very few initiatives are generally taken by personnel
departments characterized by the traditional /administrative role. (Monks, 1993)

Traditional/Industrial Relations. In firms characterized by the traditional

/industrial relations -model the personnel department spend lots of time on industrial
relations. Negotiations with unions, in order to accomplish complex agreements, are a
big part of the day-to-day business. The personnel specialists are seen as trouble-
shooters and fire-fighters as they react to problems. (Monks, 1993)

Innovative/Professional. The innovative/professional -personnel functions have

traditionally undergone major changes, such as recession or takeovers, in order to
become what they are, and thus the role is an outcome of the transformation. In these
firms, not only the personnel departments, but all business functions have changed the
way they work. Computerised personnel systems are used to provide appropriate
records, statistics and budgets. Furthermore ‘the spirit’ is moving from reactivity to
pro-activity. (Monks, 1993)

Innovative/Sophisticated. In her study, Monks found that only a few, but still some
personnel functions can be seen as innovative / sophisticated. The characteristics of
this model, is that personnel issues are integrated into strategic plans. The potential
importance of the personnel function is acknowledged and the function is represented
on the board. Personnel plans are made long-term and the function is proactive rather
than reactive. (Monks, 1993)

Monks’ four models build upon each other. As table three shows the first model is the
simplest and the fourth model the most complex. Model two includes model one, model
three includes models one and two, and model four ultimately involves all three
previous models.

Table 2 Monks’ Personnel Management Practice Framework (adapted from Monks 1993)

Traditional/
Traditional/ Industrial Innovative/ Innovative/
Administrative Relations Professional Sophisticated
COMPLEX Strategic
planning and
policy making
Complex Complex
systems for all systems for all
aspects of aspects of
personnel personnel
management management
Conflict Conflict Conflict
resolution, resolution, resolution,
negotiating, negotiating, negotiating,
bargaining bargaining bargaining
Record-keeping, Record- Record- Record-keeping,
ensuring keeping, keeping, ensuring
compliance with ensuring ensuring compliance with
rules and compliance compliance rules and
regulations with rules and with rules and regulations
SIMPLE regulations regulations
 15

Compared to the other frameworks reported in this chapter, it seems as Monks’

framework has received limited attention. One possible explanation would be that
Monks’ framework perhaps did get to play only a minor part as Storey (1992) had just
recently published a two dimensional framework, which had been regarded as more
sophisticated than Tyson and Fell’s single dimensional framework, which Monks kept
building on.

Monks’ framework differs from the four other ones mainly in respect to its
construction. It is a bolt-on model suggesting that the less sophisticated models are
included in the more sophisticated ones. Hence, the framework does not split the work
of the HR function into separate roles, which can be regarded as a strength. Still, it is a
simplistic model based on one dimension only. As a strength, the empirical evidence
which forms the foundation for the framework needs to be acknowledged.

2.2.4. Ulrich’s (1996) multiple-role model

Ulrich’s framework differs from the three previously presented frameworks in regards
to its country of origin. In contrast to the European contributions, the current one
derives from the U.S. Prior to Ulrich, also other American scholars (e.g. Foulkes and
Morgan 1977) had examined the HR function. On the east side of the Atlantic Ulrich’s
framework has received vast attention, not only among researchers but also among HR
practitioners. Another apparent difference between Ulrich’s work and the three
European studies described above is that Ulrich’s work is mainly normative.

Ulrich’s (1996) work Human resource champions focuses on four generic outcomes,
namely: strategy execution, administrative efficiency, employee contribution, and
capacity for change. Ulrich states that HR practices must be designed to create value
and to deliver results. Furthermore, he argues that a shift of focus from ‘doables’ to
‘deliverables’ challenges traditional beliefs and assumptions about HR professionals,
HR practices and HR departments. Ulrich holds that HR departments must be held to a
higher standard than they traditionally have been. They need to move their HR
professionals beyond the conventional roles of ‘policy police’ and ‘regulatory
watchdogs’ to become partners, players and pioneers in delivering results. When HR
practices are aligned with the needs of internal and external customers, firms will be
more likely to succeed. Furthermore, Ulrich states that he is an optimist when it comes
to HR, because the issues with which HR professionals deal are at the heart of
organisational success. In 1996 Ulrich declares that he believes the next ten years will
be ‘the HR decade’.

Based on the belief that the HR function simultaneously undertakes several roles,
Ulrich presents a multiple-role model for HRM. “For HR professionals to add value to
their increasingly complex business, they must perform increasingly complex and, at
times, even paradoxical roles.”

In terms of deliverables, Ulrich presents a two-by-two matrix defining four key roles
that HR professionals according to Ulrich need to fulfil to make their business
partnership come true. The four roles are: (1) strategic partner; (2) change agent; (3)
administrative expert; and (4) employee champion.
 16

Future / strategic focus

Strategic partner Change agent
Management of Management of
strategic human transformation and
resources change

Processes People
Administrative Employee
expert champion
Management of firm Management of
infrastructure employee contribution

Day-to-day / operational focus

Figure 2 Ulrich’s multiple-role framework (adapted from Ulrich 1996)

The Strategic Partner. According to Ulrich, the prime activity of a strategic partner
is to align HR strategies and practices with business strategy. HR professionals become
strategic partners when they participate in the process of defining business strategy,
when they ask questions that move strategy to action, and when they design HR
practices that align with business strategy. HR professionals should be able to identify
the HR practices that make the strategy happen. Lately, argues Ulrich, increasing
attention has been given the importance of moving HR into the strategic role, and
inappropriately other roles have tended to become neglected. (Ulrich, 1996)

The Administrative Expert. The creation of organisational infrastructure has

traditionally been one of HR’s most important activities. It includes designing and
delivering processes for staffing, training, appraising, rewarding, promoting and
otherwise managing the flow of employees through the organisation. Administrative
efficiency can, according to Ulrich, be obtained in two ways. First, the HR processes
need to be made efficient, by e.g. streamlining, automating and otherwise improving
the processes. Second, managers who increase productivity and reduce waste need to
be hired, trained and rewarded. Administrative experts run through unnecessary costs,
improve efficiency and constantly find new ways to do things better. Even though the
successful accomplishment of this administrative role adds value to the business, this
role has been down-played and even disclaimed while promoting the strategic HR
focus. (Ulrich, 1996)

The Employee Champion. HR professionals who understand employees’ needs and

ensure that those needs are met, insure an increase in overall employee contribution.
These employee champions spend time with employees and train and encourage
managers to do the same. Their main activities are listening, responding and finding
ways to provide employees with resources that meet their changing demands. The
 17

deliverables from management of employee contribution are increased employee

commitment and competence. (Ulrich, 1996)

The Change Agent. Ulrich argues that change management should be one key
activity for HR professionals. He believes change is related to improvement, and that
HR professionals should contribute to transformation by helping to identify and
implement processes for change. Further, he states that HR professionals serve as
business partners by helping employees let go of old habits and adapt to a new culture.
The action of change agents include identifying and framing problems, building
relationships of trust, solving problems and creating and fulfilling action plans. (Ulrich,
1996)

Ulrich’s multiple-role model is a result of his vast array of experience of work with
hundreds of HR professionals. The framework is thus based on practical experience
and little attention is given to previous academic research in the area. However, many
scholars have given the multiple-role model their support, and it is today widely cited
(e.g. Baill 1999; Barney and Wright 1998, Becker and Huselid 1999; Björkman and
Søderberg 2003; Caldwell 2001, 2003; Ferris et al. 1999; Guest and King 2004; Hope
Hailey 2001; Wright et al. 2001).

Hope Hailey (2001) used the roles identified by Ulrich (1996) for mapping purposes to
understand the role of HR in her case study. The findings supported Ulrich’s
framework as the HR function in the case organisation stressed change management
(change agent), working with employee potential (employee champion) and being a
business partner (strategic partner) with the line. Hence, the framework was used as a
research tool, but its applicability was not discussed further by Hope Hailey.

Research evidence additionally shows a degree of conflict and ambiguity between

Ulrich’s four roles. The difficulty of combining organisational roles with roles focusing
on employees is noticed by Hope Hailey and associates (2005), who argue that the
perplexity of balancing both a process-oriented and a people-oriented role results in the
HR function largely neglecting relations with employees. These findings support
Caldwell’s (2003) critique on role ambiguity.

Caldwell (2003) contrasted Ulrich’s framework with the typology of Storey, concluding
that neither model can accommodate the emergent tensions within the role of HR.
Caldwell (2003) acknowledged that Ulrich’s model recognises the multiple and flexible
nature of HR roles. It is a strength to recognise the need for the HR function to play
various roles simultaneously. Nevertheless, Caldwell (2003) notes an overlap between
Storey’s and Ulrich’s role descriptions, which suggests that Ulrich’s roles are not as
radical as Ulrich pretends them to be. Caldwell concludes that Ulrich’s model may be a
form of pragmatic post-rationalisation of intensified role ambiguity and conflict in the
face of new uncertainties, rather than a realistic prescription for the future.

Also, Conner and Ulrich (1996) reckon problems with the framework, as they failed to
verify the two-by-two matrix, when testing it by using a questionnaire. According to
their results, data confirmed the existence of three roles, but failed to distinguish
between the strategic partner and the change agent role.

Ulrich’s framework from 1996 can be criticised for its prescriptive and didactic point of
departure. The framework is based on Ulrich’s private experience in the U.S. and does
not report any empirical or methodological features. Also, the fact that the framework
 18

is based on American circumstances might diminish its applicability elsewhere11.

Nevertheless, Ulrich’s framework has become an often cited classic as it is a systematic
framework, which captures the emergence of new HR roles.

2.2.5. Ulrich’s and Brockbank’s revision from 2005

In 2005 Ulrich and Brockbank published The HR value proposition, a guidebook for
HR professionals, which assumingly is destined to become a new bestseller. The main
focus of the book is on what HR professionals should do in order to add value to the
company. One chapter is, however, spent on the reformulation of the key roles played
by HR professionals.

Table 3 The evolution of HR roles during the last decade (adapted from Ulrich and
Brockbank 2005a)

Ulrich 1996 Ulrich and Brockbank 2005a

1 Employee advocate
1 Employee champion
2 Human capital developer

2 Administrative expert = 3 Functional expert

3 Change agent
4 Strategic partner
4 Strategic Partner
5 HR Leader

As seen in table 3, Ulrich and Brockbank have split the employee champion role into
two, and merged the change agent and the strategic partner to become one.
Additionally they have added the HR leader to the list of HR roles, and renamed the
administrative expert. Hence, the five proposed roles are: (1) employee advocate; (2)
human capital developer; (3) functional expert; (4) strategic partner; and (5) HR
leader. Ulrich and Brockbank (2005b) state that the reformulation is a response to the
changing roles they are observing in the leading organisations with which they work.

“We see HR professionals working as employee advocates to make sure the employer-employee
relationship is one of reciprocal value. As human capital developers, they build the workforce of the future.
They are also functional experts who design and deliver HR practices that ensure individual competence
and organisation capability. As strategic partners, they help line managers at all levels to reach their goals.
And to tie it all together, they must be genuine leaders -- credible both within their HR functions and to
those outside. We have noticed that the role we originally dubbed "employee champion" tends to divide
into the two distinct roles of employee advocate and human capital developer. The old administrative
expert role seems to have expanded, with the development of technology, into a broader functional expert
and the work of "change agent" is often absorbed into that of the HR strategic business partner. Leadership

11 See chapter 2.4.1

 19

is so critical that we have sought to emphasise its importance by seeing it as a distinct role in its own right,
providing leadership to those in the business as well as in the function.” (Ulrich and Brockbank 2005b:24)

Notably Ulrich and Brockbank (2005b) argue that no one plays all five roles to the
same degree. Depending on where you work in the HR function, different roles have
primary or secondary importance. Shifting from one department to another requires a
change of roles, and the shift affects HR careers.

Employee advocate. Caring for, listening to, and responding to employees remain a
centrepiece of HR work. Employee advocacy is not merely window-dressing; it
contributes to building the human infrastructure from which everything else in the
organisation flows. General activities undertaken by the HR advocate includes
proposing fair policies for health and safety, terms and conditions of work, and
discipline, as well as implementing these policies corporate-wide. Also, employees
contributing to the firm should be given increases in personal rewards that are
proportionate to their contributions. Advocacy also involves managing diversity and
ensuring mutual respect so that people feel comfortable sharing and discussing various
points of view. HR's role is to root out discrimination whenever it appears. (Ulrich and
Brockbank 2005a)

Human capital developer. Human capital developers focus on the future

developing plans that offer each employee opportunities to develop future abilities. The
role also includes helping employees unlearn and relearn (Ulrich and Brockbank
2005a). The human capital developer is thus mainly occupied with tasks traditionally
mastered by the human resource development manager.

Functional expert. Ulrich and Brockbank divide the functional expert role into two
categories, namely foundational HR practices and emerging HR practices.
Foundational HR practices are those practices for which most HR departments have
direct responsibility. They include recruitment, promotions, transfers, outplacement,
measurement, rewards, training and development.

Emerging HR practices, the second category, are those which have substantial influence
on the human side of the business but which are usually not under the direct influence
of most HR professionals. They include work process design, internal communications,
organisational structures, design of physical setting, dissemination of external
information throughout the firm, and executive leadership development.

According to Ulrich and Brockbank (2005b) functional expertise operates at several

levels. First, the role involves creating solutions to routine HR problems, by e.g. placing
HR solutions online. Second, HR specialists create menus of choices, drawing on
theory, research and best practices in other companies. Thirdly, HR specialists consult
with businesses and adapt their programmes to unique business needs. Fourth, the
functional expert sets overall policy and direction for HR practices within a speciality.
This calls for understanding of strategy and the ability to adapt to a strategic context.
While requirements for functional experts may vary across these tiers of work, some
general principles apply to all functional specialists.

Strategic partner. In their role as a strategic partner, HR professionals bring know-

how about business, change, consulting and learning to their relationships with line
managers. As strategy formulators, HR professionals play at least three distinct roles.
First, as reactive devil's advocates, they ask tough questions about the accuracy of the
strategy and about the company's ability to make it happen. Second, they play an active
 20

role in crafting strategies based on knowledge of current and future customers and
exploring how corporate resources may be aligned to those demands. Third, they play a
developmental role in helping to raise the standards of strategic thinking for the
management team.

As strategy implementers and change agents, they align HR systems to help accomplish
the organisation's vision and mission. They diagnose organisation problems, separate
symptoms from causes, help to set an agenda for the future, and create plans for
making things happen. They help to make change happen fast by being not only
thought leaders, but masters of practice who turn what they know into what they do.
They serve as coaches, shaping points of view and offering feedback on progress. As
facilitators, they help both individual managers and management teams get things
done. As integrators, they disseminate learning across the organisation - generating
and generalising ideas with impact.

HR leader. At the top of their HR organisation, HR leaders establish an agenda for

the function within the firm - both for the way people and the organisation come
together to drive business success, and for the way the function itself will operate. A
well-led HR department earns credibility, and the reverse is also true.

Ulrich’s and Brockbanks’s revision contains the same main weaknesses as did Ulrich’s
framework from 1996. It is a normative model that has not been developed, based on
and validated through academic methods. Also, the problem with role ambiguity seems
to remain.

The five roles presented do no longer fit into Ulrich’s two-dimensional typology. Ulrich
and Brockbank have made an attempt to move away from the people-versus-processes-
dimension, as the change agent is merged with the strategic partner. The interrelations
of the roles are thus vaguer in the update than they were in the precursor. Especially
the role of the new ‘HR leader’ and its relations to the other roles remains unclear.

When writing this thesis little time has passed since the publication of Ulrich’s and
Brockbank’s book. Hence, it is yet to be seen to what extent and in which manner the
new framework will be used in future research.

2.2.6. Additional research on HRM in Europe

In addition to the frameworks mentioned above, other European works and scholars
need to be acknowledged. The Cranfield Network (Cranet) is a very important resource
regarding comparative analysis on HRM in Europe.

Cranet has been running the survey since 1990 using standardised questionnaires sent
to private and public organisations in different countries. It is not an opinion survey,
on the contrary all questions are factual and require factual answers such as numbers
or percentages or a yes/no response. The survey covers major areas of HRM policies
and practices and all questions focus on the organisational level. The questionnaire is
addressed to the most senior HR/personnel specialist in the respondent organisations.
(www.cranet.org)
 21

As Cranet consists of a longitudinal element, in addition to comparing and contrasting

HRM practices in different countries, it also follows the development of HRM in
Europe over time.12

2.3. The HR function and role change

Above, various potential roles of the HR function have been discussed, including the
‘change agent’, which was initially suggested by Ulrich (1996). As this study deals with
the evolving role of the HR function during a time of organisational change (i.e. merger
integration), it is reckoned that the change agent role might be of particular interest.

Several scholars have discussed the HR function’s potential role in organisational

change management. The normative discussion on the HR function as a change maker
is, however, more extensive than the actual evidence of the HR function being an active
change maker. (see e.g. Caldwell 2001; Ulrich 1996)

The expectations on the HR function and change management can broadly speaking be
divided into two: 1) expectations on the HR function to have a strong role in
organisational change and thus be a corporate change maker (Ulrich 1996), and 2)
expectations on the HR function to develop its own role and thus be an intrafunctional
change maker. In this study, it is in particular the debate around the latter expectation
that is of interest. Nevertheless, it is assumed that the two are interrelated – changes
within the function might affect the HR function’s stance on organisational change and
vice versa.

2.3.1. Previous empirical evidence on role change

As noted above, several scholars have discussed the changes within the roles played by
the HR function. Numerous papers suggest forthcoming changes, arguing that HRM is
a field in transition (Hiltrop et al., 1995). However, the existing empirical evidence
seems conflicting, as some findings suggest stability in HR while some have found
proof of changes.

Within her Irish data13, Monks (1993) has found evidence of changing roles. She argues
that in firms that undergo major changes, the personnel department, as well as all other
departments, is likely to come under the microscope. Examples of major organisational
changes she refers to are recession, difficulties in trading, and mergers and
acquisitions. Regarding the HR function, the occurring changes mainly implied moving
away from traditional models of HRM to more innovative models. (ibid) The changes
Monks found evidence for are consistent with the beliefs of Tyson and Fell (1986) that
the HR role is dependent on the state of the organisation.

Brewster (1995) argues that research data (Cranet) show considerable stability over
time. Despite the longitudinal element of the study, Brewster (1995) has not found
significant changes in the role of the HR function, and no convergence between HR
roles in different European countries. Ten years later Mabey et al. (2006:210) argue
that the role of the HR specialists without a doubt is changing. They predict that the
role is moving away from day-to-day management and implementation towards
counselling. The future areas of HR counselling are argued to be corporate long-term

12 For more Cranet based findings see chapter 2.3.1

13 For a more thorough description of the data, see chapter 2.2.3
 22

value, strategic brokering and psychological well-being of employees. Moving towards

these roles, however, demands the courage to risk changing the role (ibid).

2.3.2. Mergers as change makers

Above I have frequently argued that a merger potentially constitutes an interesting

setting for studying HR role change. The decision to merge two organisations is often
driven by a corporate strategy which aims at fast development, for instance the need to
acquire technological knowledge or the desire to gain access to new countries (Marks
1997). An organisation that is involved in a merger is hence assumingly exposed to
rapid development. A merger can furthermore be regarded a tool for transformation, as
merger integration implies the combining of two previous entities, and thus the birth of
a new organisation. All parts of the organisation are likely to be affected by the changes,
the HR function included.

During a merger, the managerial positions of the pre-merger organisations are

redistributed and thus new power relations will occur in the post-merger corporation.
Assumingly the role of the HR function in the integration process, including the
appointment of post-merger managerial positions, can vary. In living up to Ulrich’s
(1996) expectations for HR as a change agent, the HR function could take a leading role
in the integration of the entire organisation. Following Björkman and Søderberg (2006)
it could on the contrary be argued that the HR function is likely to focus on
intrafunctional tasks only, sorting out the new power relations within the function.
Regardless if the HR function is active in the entire integration process or not, the
integration as such will affect the HR function. The practices and routines of the two
pre-merger HR functions are likely to include at least some differences, and they are
lead by different people.

The transformation in general is dependent on the abandonment of existing practices

and routines as well as of the development of new ones (Marks and Mirvis 2001).Marks
(1997) acknowledges that a hindering factor to successful change management in post-
merger integration is employees’ resistance to change. Change wariness is argued to be
a consequence of organisations’ previous failing attempts at large-scale change. The
term merger has an increasingly bad reputation among employees who will think of
downsizing (ibid). Marks and Mirvis (2001) point out the differences in the mindset of
the sellers and buyers, arguing that the buyer is likely to feel superior and urge to
dominate the integration, while the seller is likely to be defensive.

2.4. The HR roles framework

Above, five HR frameworks have been presented (i.e. Tyson and Fell 1986; Storey 1992;
Monks 1993; Ulrich 1996; Ulrich and Brockbank 2005a). Despite their differences, and
even though many years have passed since the four first frameworks were published,
the models still merit attention. The frameworks all encompass elements that still seem
relevant for HRM in the Nordic countries. As noted above, all five frameworks have
received some degree of criticism. Hence, I propose a new framework which combines
elements from the above presented frameworks. The proposed framework is supposed
to be applicable to research on the HR function in Nordic countries, and thus argued to
be general in the sense that it is not restricted to apply to the merger context only.
 23

As the starting point of my research is mainly deductive, the framework proposed in

this study will by definition be based on previous literature, in particular the
frameworks referred to above. However, as a pilot study was conducted in an early
stage of the study, some elements of an abductive research approach14 can also be
found. Thus, the pre-understanding is based on a thorough academic literature review
in combination with discussions with a handful of HR professionals early in the
research process.

2.4.1. The applicability of U.S. studies

There certainly are variations in HRM practices in each European country, but based
on the Cranet data15, Brewster (1993) argues that Europe – taken as a whole – stands
out as being distinct from other economic areas, for instance the U.S. He compares the
European HR model with that in the U.S. and remarks that the comparison will to a
large extent build on empirical evidence from Europe on the one hand and on
normative statements from the U.S. on the other hand. Much of the U.S. literature
constitutes a prescriptive statement of what should be happening (Brewster 1993).
Likewise, my study observes that Ulrich’s American framework is mostly prescriptive16,
while the three former European models are based on empirical research. Thus, when
taking a position on whether U.S. works are applicable in a European context one needs
to address both the variations in HRM practices across the Atlantic, and the problem of
applying and empirically testing normative statements.

In Europe, the autonomy of organisations is constrained at national level by legislation.

At the HRM level it implies heavy trade union involvement (Brewster 1993). In the
U.S., on the contrary, the level of support and control provided by the state is low.
According to Pieper (1990), the degree to which HRM is influenced and determined by
state regulations is the main difference between HRM in the U.S. and in Western
Europe. Storey (1992) argues that the American HR initiatives carry a considerable
element of individualism, while collectivism still is very much alive in Europe. Thus,
reflecting on the five frameworks presented above, it seems only natural that the
European authors have highlighted the industrial relations (contracts manager;
regulator; traditional/industrial relations), while in the two American frameworks this
is left out.

Hence, an American framework for HRM is not likely to take into account all aspects
that are relevant in Europe. The differences between Europe and the U.S. seem large
enough that the context needs to be taken into consideration (Brewster 1993; 1995)
However, the number of similarities between HR in the U.S. and Europe need not to be
forgotten and therefore it can be concluded that the U.S. frameworks, with a bit of
adjustment can be regarded as useful tools – at least supplementary - when studying
European HRM.

The case organisations of this study are not only European, but more precisely they
originate from either Finland or Sweden. These two countries have a long joint history,
as Finland was part of the Swedish kingdom for some 700 years, from the 1100s until
1809. The similarities between Finland and Sweden today are to a large degree
explained by the well-established Nordic co-operation, which has it roots in the

14 For more information on the abductive research approach see chapter 3.1.5
15 for a discussion on Cranet see chapter 2.2.6
16 For a validation attempt see Conner and Ulrich 1996
 24

foundation of the Nordic Council in the 1950s17 (Lindeberg et al. 2004). Today, Finland
and Sweden are both members of the European Union. Finland has also joined the
European Monetary Union, while Sweden remains outside the common currency. As
Lindeberg and associates (2004) note, this difference seems not to have had any
negative effect on the flourishing co-operation, with mergers across the Baltic Sea.

The Finnish GDP as well as the Swedish originates primarily from services, followed by
manufacturing and agriculture. The main Finnish exports are machinery and
equipment, chemicals and metals, as well as timber, paper and pulp. The traditional
Swedish export products are cars, ball bearings, paper and pulp, and chemicals. IT-
technology and telecommunications is an important sector in both neighbouring
countries.

The trade union density in Finland and Sweden is among the highest in Europe, as well
as world -wide. According to the Central Organisation of Finnish Trade Unions (SAK),
Scandinavian unions are the world's most successful labour organisations, enrolling 78
percent of Swedish workers and 74 percent of Finns. Both employees and employers
are highly organised18.

Regarding HRM in general and the HR function in particular, there is very scarce cross-
national comparative work between Finland and Sweden. The Cranfield study is
evidently a great asset, but surprisingly often it leaves out either Finland or Sweden in
its comparative research reports. An exception is the book chapter by Lindeberg,
Månson and Vanhala (2004) that describes and compares HRM in Sweden and
Finland. Lindeberg et al. (2004) point out one difference in the role of the HR function
between Finnish and Swedish firms, which is the presence of the HR director in the top
management team. In the 90s Swedish firms steadily reported a higher percentage of
HR managerial board presence than Finnish firms did. Approximately 80% of Swedish
firms included the HR director in the top executive team, while the corresponding
number among Finnish firms was 65%. (Lindeberg et al. 2004)

2.4.2. The applicability of normative statements

Purcell (1995) takes a critical stand on normative statements, arguing that it is highly
deceptive to bring forward policy prescriptions on how to maximise productivity,
performance and profits without regard to the context in which the organisation is set.
Further, he states that the most important issue facing the HR function is to identify its
unique, i.e. context-specific capabilities. Hence, the relation between successful HRM
and the adoption of normative statements seems mainly coincidental. To create a
stronger link between theory and practice, Brewster (1993) sees a need for empirical
data from the U.S. He argues that there is a true need for a substantial survey of
organisations in the U.S. to establish hard data on the extent of particular practices in
HRM, as a complement to the existing conceptual papers. Legge (1995) argues that
comparisons which are not like-to-like are misleading. It is fair to compare normative
models with normative, and empirical with empirical. (Hoque and Noon 2001) Hence,
applying normative work in empirical research, especially basing empirical research on
assumptions deriving from normative models, is regarded to be problematic. The
empirical testing and possible verification of normative statements is nevertheless
doable.

17 Nordic council was founded in 1952 as a forum for inter-parliamentary co-operation between Sweden,
Denmark and Norway. Finland became a member in 1956 (Lindeberg et al. 2004).
18 source: www.sak.fi; http://www.sak.fi/englanti/index.shtml
 25

The pre-understanding of this study is based on empirically tested models (Tyson and
Fell 1986, Storey 1992, Monks 1993) as well as on normative work that has only
partially been empirically validated (Ulrich 1996; Ulrich and Brockbank 2005a). The
differences need to be kept in mind when pursuing the empirical research of this study.

2.4.3. Five roles of the HR function

This study proposes a framework consisting of five roles for the HR function. The
framework constitutes a summary of my pre-understanding regarding HR roles, and is
developed to form a base for my empirical study. Thus, the framework is the lens
through which the empirical data is examined. In the concluding chapters I will reflect
on the applicability of the framework.

The five roles are to be seen as roles that can be played simultaneously. Although the
classification of activities sometimes may be less than self-evident, the roles are not
intended to be overlapping. An HR function can undertake either one sole, a few, or all
five roles at the same time. Over time, the extent to which the different roles are visible
will vary. The roles are not intended to be perceived in any hierarchical order. The five
proposed roles are: (1) the Process Engineer; (2) the Negotiating Lawyer; (3) the
Employee Advocate; (4) the Strategy Implementer; and (5) the Business Partner.

When discussing the role of the HR function it seems relevant to refer to different
degrees of strategic involvement. Tyson and Fell’s (1986) and Monks’ (1993) models for
personnel management are discussed in order of strategic importance of the HR
function from least strategic to most strategic. Likewise Storey (1992) distinguishes
between strategic and tactical roles, and Ulrich (1996) between strategic and
operational ones. Hence, the proposed roles will be discussed with regards to their
degree of strategic involvement.

As argued by Hope Hailey and associates (2005) it seems problematic to distinguish

between processes and people as Ulrich (1996) does. Storey’s (1992) distinction
between interventionary and non-interventionary types seems more relevant. Related
to the interventionary dimension, several scholars have discussed the HR function with
regards to degree of activeness, from proactive to reactive (e.g. Brockbank, 1999;
Caldwell 2003; Ruona and Gibson, 2004; Ulrich 1996; 1998). Thus building on
previous work a dimension labelled proactive versus reactive, which is more in line with
Monks (1993) argumentation, is suggested.
 26

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Process
Advocate Engineer
Negotiating
Lawyer

Tactical

Figure 3 The proposed framework for HR functions

The Process Engineer. Tyson and Fell (1986), Storey (1992), Monks (1993), Ulrich
(1996) and Ulrich and Brockbank (2005a) all seem to agree that within the
personnel/HR function there exist routine tasks which the function needs to take care
of. The role/model is labelled differently (i.e. Clerk of works, Handmaidens, Traditional
/Administrative, Administrative expert, Functional expert) but contain several
similarities. The proposed Process Engineer role implies a routine and monotonous
role (Chiavenato, 2001), which is influenced by the above mentioned roles and models,
and lacks a business focus.

The Process Engineer is a service provider catering for basic routine activities such as
administrating non-strategic HR tasks. This implies for instance the activities of
performance appraisals; employee orientation and training; initial selection screening;
and record keeping in regards to absence, sickness and pay. The process engineer
designs and implements HR processes, such as the flow of employees and pay systems.
Hence, the Process Engineer provides service with regards to the routine requirements
of the line.

The engineer metaphor intends to describe a role consisting of an increasing use of

electronic tools. The use of electronic applications in HRM has increased during the last
decade as a consequence of the technological development (Strohmeier 2007) and the
term e-HRM is gaining ground. Moreover, HR functions are in increasing numbers
building centralised service centres to cover a range of administrative HR processes.
The process engineer role includes the responsibility of such centers. The process
engineer role is furthermore handling the possible out-sourcing of various HR tasks
such as payroll and head-hunting. According to Klaas et al. (2001) the out-sourcing of
HR activities is increasing.
 27

Research evidence (e.g. Strohmeier 2007) suggests that the use of electronic
applications in HRM is most common concerning HR administration. For instance
payroll is commonly supported by electronic tools.

Tyson and Fell (1986) state that the clerks of work -model is a support function.
Likewise, this study emphasises that the Process Engineer’s core duty is to support line
management and executives by smoothly handling routine HR tasks.

The Negotiating Lawyer. The proposed lawyer is mainly influenced by Tyson and
Fell’s (1986) Contracts manager, Storey’s (1992) Regulator and Monks’ (1993)
Traditional/Industrial Relations model. The role is characterised by heavy IR emphasis,
and the Lawyers are to a high degree occupied with negotiations with the trade unions
and working on collective agreements. Given that this study is conducted in Finland
and Sweden where the trade union membership rate still is high compared to any other
western country, the Lawyer role seems important.

The Negotiating Lawyer is, in line with Storey’s (1992) regulator responsible for
devising, negotiating, and defending the procedural and substantive rules which govern
employment relations. An additional core activity is the design and alignment of
employment contracts.

The Employee Advocate. Ulrich (1996) and Ulrich and Brockbank (2005a) highlight
the role of the HR function as an employee champion, an employee advocate and a
human capital developer. These roles are notably suggested by Americans and not
Europeans, perhaps as a substitute to the previous Negotiating Lawyer role. Guest
(1995:111) argues that “the logic of a market driven HRM strategy is that where high
organisational commitment is sought, unions are irrelevant”. He further argues that
the idea of a highly organisationally committed workforce challenges the need of trade
unions. Viewed as two extremes, the organisational commitment model stands for high
trust, a unitarist and individual standpoint, as well as flexible roles and a flat structure
in contrast to the IR model, which is characterised by low trust, a pluralist and
collective viewpoint, formal roles and hierarchy (Guest 1995).

Nonetheless, there may in addition to the Lawyer role be room in the framework for
another role, which emphasises employees’ commitment to the organisation. The
underlying assumption is that regardless of trade unions, in the competition for loyal
and competent employees, employers might want to prove that they do care. In
financial terms the caring is justified with less loss of personnel, lower recruitment
costs and greater return on investment regarding training and HRD. Additionally,
Guest (1995) states that committed workers will be highly motivated which promises
higher performance, and, committed workers will probably need fewer supervisory and
inspection staff in order to complete their tasks, which also reduces costs. (Guest, 1995)
This study assumes that organisations might want to take responsibility for their
workforce regardless if the employees are union members.

The core activity of the Employee Advocate role is to commit the employee to the
organisation by: designing and implementing systems that prevent uncertainty;
managing training and HRD; ensuring performance based pay and job satisfaction;
moving; motivating; and stimulating workers. An Advocate is a people promoter, who
cares about the employees and shows them respect. The Advocate furthermore
recognises the workers’ unique personalities, intelligence and abilities (Chiavenato,
2001) and how the organisation can profit from that resource.
 28

As the proposed framework by definition concerns the HR function, it does not, in

contrast to Ulrich’s framework, take any stand on what line managers ought to do. The
advocate role, as all other proposed roles, is in this study analysed in terms of the
activities carried out by the HR function.

The Strategy Implementer. This study distinguishes between reactive

implementers and proactive partners. An implementer is involved in strategy work, but
as a support function, never in the driver’s seat. An implementer reacts to business
needs. Furthermore, the role is involved in strategy work, but mainly concerning
strategy implementation and execution as well as process evaluation, in contrast to
strategy planning. The implementer is characterised by fairly blind reactive obedience
and considered as rather passive agent (Chiavenato, 2001).

Truss et al. (2002) distinguish between two managerial types, A and B. The
implementer is likely to resemble type B. The type B HR manager is focused on his/her
area of expertise and is reactive and traditional in the managerial approach.
Furthermore it is argued that the type B manager is hesitant in the ‘will to manage’ and
unlikely to achieve high reputational effectiveness.

The implementer role is to some extent influenced by the architect, the Adviser, the
Innovative / professional model, and the Strategic partner, but has been narrowed done
considerably to include a much lower number of activities. The main activities
characterising the work of the implementer are corporate strategy implementation;
strategy execution; process evaluation; realigning HR policies and processes; and
management consultancy.

The Business Partner. In contrast to the implementer, the partner is a proactive

business partner who contributes to business strategy planning and possesses an
enhanced understanding of strategic HR issues with the top management of the firm.
Monks (1993) makes a distinction between the two models ‘innovative/professional’
and ‘innovative/sophisticated’, and Storey distinguishes between Advisers and
Changemakers. These distinctions inspired me to propose two separate strategic roles,
otherwise mainly influenced by Tyson and Fell’s architect and Ulrich’s strategic
partner.

As reported above, Truss et al. (2002) divide managerial types in two. They argue that
type A HR managers are respected and carry influence within their organisations,
seeing themselves as business managers and strategic partners. The proposed business
partner is likely to resemble a type A HR manager.

In line with Storey’s (1992) change maker, the business partner makes a proactive,
interventionary and strategic contribution. The role is characterised by creativity and
innovation. A partner deals with uncertainty and ambiguity, keeps in mind the vision of
the future and the organisation’s destiny, is spontaneous and proactively collaborates
with line managers and executives. The partner is not afraid to break with tradition
(Chiavenato, 2001). A proactive business partner is traditionally a member of the
executive management team.
 29

Table 4 Five proposed roles

FIVE Tyson and Storey 1992 Monks 1993 Ulrich 1996 Ulrich and
PROPOSED Fell 1986 Brockbank
2005a
ROLES
1 Process Clerk of Handmaidens Traditional / Administrative Functional
Engineer works Administrative expert expert

2 Negotiating Contracts Regulators Traditional /

Lawyer manager Industrial
Influenced by:

Relations
3 Employee Employee Employee
Advocate Champion advocate,
Human Capital
developer
4 Strategy “Functions Advisers Innovative / Strategic partner Strategic
Implementer moving from professional partner
contracts
managers to
architects”
5 Business Partner Architect Change makers Innovative / Change agent Strategic
sophisticated Strategic partner partner
HR leader

2.5. Factors influencing the roles of the HR function

My study seeks to explore factors affecting the roles played by the HR function. This
area of research has received very limited empirical attention. Several scholars have
discussed the impact of organisational change on HRM, however almost exclusively
with regards to fit theory and organisational efficiency (e.g. Baird and Meshoulam
1988) or strategic effectiveness (Hendry and Pettigrew 1992). Only few scholars have
gone beyond the strategic-fit-discussion to gain a more comprehensive picture of the
factors that influence HR.

In 1978 Legge addressed a problem facing the personnel management (PM) literature,
namely that the context in which the personnel function operates often is left out as
scholars focus on normative and prescriptive statements about the content of the
personnel function. Legge argued that the organisational context, including history and
ownership, size, technology, goals and objectives, the environment, and potential
employees, is likely to constrain and mould the content of the personnel function. Also,
MacDuffie (1995) noted that HR practices often have been removed from their setting
in past research.

Stiles and Trevor (2006), recently called for more research into the HR department,
arguing that the degree to which normative or coercive forces affect the structuring of
the roles of HR departments remains unknown. Also, Caldwell and Storey (2007) state
that there is little empirical research on how HR structures, processes and boundaries
are affected. Within the research programme at the centre for corporate strategy and
change at University of Warwick, the context has, however, been highlighted foremost
by Hendry and Pettigrew (e.g. Pettigrew 1985; Hendry and Pettigrew 1987; Hendry and
Pettigrew 1990; Hendry and Pettigrew 1992).
 30

Based on empirical research consisting of case studies, Hendry and Pettigrew (1990)
created a model for strategic change and HRM. They argued that both the business
context (inner and outer) and the business strategy content have an impact on HRM. In
contrast to normative models, empirical models in the area are scarce (Gratton et al.
1999).

Figure 4 Strategic change and HRM (Hendry and Pettigrew, 1990)

This section reviews and discusses factors that might have an impact on the HR role
formulation. The structure of the review of influencing factors is influenced by previous
work by among others Hendry and Pettigrew (1990), Schuler et al. (1993) and Legge
(1978). Nevertheless, the study acknowledges that the factors are embedded in different
organisation theories (such as institutional theory and the resource-based view) and
these are referred to in the review below.

The structure of the review of the influencing factors is as follows: First, influenced by
Hendry and Pettigrew (1990), the factors are divided into two contexts, namely an
outer and an inner context. Also, Schuler et al. (1993) made the distinction between
exogenous and endogenous factors, i.e. factors outside the organisation and factors
within the organisation. Second, the inner context is, following Legge (1978), divided
into organisational and individual/functional factors. In section 2.6 a table which
summarises all influencing factors is presented.
 31

2.5.1. The outer context

Based on theory originating from the field of organisational development (OD) Hendry
and Pettigrew have conducted a large number of in-depth studies on business and
human resource change (e.g. Pettigrew 1985 since the mid 1980s; Hendry and
Pettigrew 1987; Hendry and Pettigrew 1990; Hendry and Pettigrew 1992). Their studies
build on a framework which takes into account the evolution of HRM practices and
business strategy and also of the context, both inner and outer, in which the change
takes place.

The outer context is a macro level context, considering factors independent of the
organisation. Outer factors that are believed to affect HRM are following Hendry and
Pettigrew technology, the socio-economic and political environment, legislation as well
as competition. Other scholars (e.g. Brewster 2007a; 2007b; Ferner and Quintanilla
1998, Schuler et al. 1993) have argued that also the national environment and the
industry characteristics are factors within the outer context that might have an impact
on HRM. Next, the outer context factors will be discussed in more depth.

Technical innovation has made HR services more efficient (Brewster et al. 2007) and
thus opens up opportunities for HR to restructure its resources. Brewster and Sparrow
(2007) report evidence of new technology creating awareness among HR specialist of
the need for change and increased efficiency within the HR function. Nonetheless, their
research results do not yet show much evidence of HR functions successfully
restructuring its resources.

Broadly speaking the socio-economic environment referred to by Hendry and Pettigrew

(1992) is the combination of external social and economic conditions that influence the
operation of organisations. The economic conditions – the economic cycle in particular
- is argued (Lähteenmäki et al. 1998) to have an important impact on HRM.
Lähteenmäki and associates (1998) found that recession implies hard times for most of
organisations including the HR functions, implying e.g. the withdrawal of employee
development schemes. As the definition of socio-economic environment is broad and
overlaps other mentioned external factors (e.g. competition), I chose to discuss the
economic cycle as an influencing factor. The economic cycle refers to the predictable
long-term pattern changes in macro economy, including four different stages, featuring
expansion (upswing), prosperity (boom), contraction (slump), and recession.

Many external factors can be derived from institutional theory. Institutional theory
suggests that organisations are under social pressure to adopt practices that are viewed
as being appropriate for the situation (DiMaggio and Powell 1991). The isomorphic
pressure to become more like other firms might for instance prevail in national
contexts, as a consequence of the political and legal environment. Also, the competition
and bench-marking with other corporations might put pressure on organisations to act
alike. Numerous scholars have used institutional theory in their attempt to map HRM
(see e.g. Wright and McMahan 1992; Aycan 2005; Paauwe and Boselie 2003; Björkman
et al. 2007).

Several scholars have discussed the national environment and its possible implications
on HRM, especially within multinational corporations (MNCs) (see e.g. Brewster
2007a; 2007b; Brewster, Sparrow and Vernon 2007; Ferner 1997; Ferner and
Quintanilla 1998). Attention has been paid to the possible differences in the HR
practices between different countries. (e.g. Ferner 1997; Ferner and Quintanilla 1998;
 32

Brewster 1993; 1995) The impact of the national environment on HRM has within
Europe been studied by the Cranfield group.19

Legislation varies across countries. On the one hand legislation might restrict an
organisation from certain HR activities (e.g. layoffs) and on the other hand it might
force the organisation to other duties (e.g. work safety). Hence, the more extensive
labour law and collective labour agreements, the more the hands of the HR function are
tied. As discussed in section 2.4.1, the legislation in the US does not in general terms
restrict the industry to the same extent as legislation does in European countries.

The political environment includes a number of factors that might impact HRM.
Factors of concern are for instance the national political system and ideology; the role
of government in the economy; political (in)stability; and international political
relationships. Schuler at al. (1993) noted that political conditions are an exogenous
factor which impacts the organisation’s management of its human resources. Moreover,
Legge (1978) pointed to the impact of labour supply, which in turn might be a
consequence of politics and/or demography, and market structure, also possibly
affected by the interaction between political and economic phenomena, on HRM.

Truss and associates (2002) argue that, apart from the changing economic and social
climate, an external factor that might affect the HR role is the prevailing competition
and pressures to benchmark with organisations operating in the same sector. With
reference to institutional theory, the impact of other corporations’ actions is regarded
as a possible influencing factor. The industry characteristics, which according to
Schuler et al. (1993) might affect strategic international HRM, include according to
them the type of business and technology available; the nature of the competitors; and
the extent of change. The definition of industry characteristics is hence broad and
partly overlaps with other influencing factors. Datta et al. (2005) examined the impact
of industry characteristics, finding that industry conditions have a moderating effect on
the relation between HRM and organisational performance.

The factors of the outer context listed above are partly overlapping and, thus,
problematic to use as a base for empirical research. Legislation for instance is part of
the national environment. Institutionalisation can be discussed not only with reference
to benchmarking and competition, but also with regards to industry, legislation and
nationality. In this study I divide the outer context into four factors, namely 1) the
economic cycle, 2) political and legal environment, 3) impact of other corporations, and
4) technological development. The economic cycle refers to the prevailing economic
situation. The political and legal environment implies the political environment as
stated above including also legislation. The impact of other corporations refers to the
pressures to become more alike other firms and includes influences from competitors
and other players in the same industrial and/ or national context. The technological
development relates to the discussion on technical innovations above.

2.5.2. The inner context

The inner context of the firm is following Hendry and Pettigrew (1992) interpreted
through the lens of organisational culture and structure, and by its task-technology
commitments, business performance and leadership. The first four factors can be
regarded as organisational, while leadership refers to individual actors. This section,

19 For a discussion on Cranet based research see sections 2.2.6 and 2.3.1
 33

which discusses the inner context of the organisation, is accordingly divided into
organisational and individual factors.

2.5.2.1. Organisational factors

Numerous scholars (e.g. Pfeffer 1994; Wright and McMahan 1992) have drawn on the
resource based view (RBV) (Barney 1991; 1995) discussing the competitive advantage
of HR for organisations (Ferris et al. 1999). The RBV is a theory of sustained
competitive advantages. According to RBV, application of firm-specific organisational
resources, i.e. the intra organisational factors, form the competitive advantage of the
corporation. Accordingly, there is a strong belief that the intra organisational factors
make a difference in the design and value creation of the HR function.

Hendry and Pettigrew (1992) claim that organisational management is forced to

become strategic when an organisation’s managers meet increased complexity in their
internal and external work environment. The trend is linked to organisational life-
cycle patterns, whereby organisations develop more complex HR activities as they
grow. Likewise, Baird and Mashoulam (1988) argue that HRM develops through a
series of stages as the organisation becomes more complex. Baird and Mashoulam
(1988) suggest five organisational stages and five corresponding HRM responses. A
new organisation (stage 1) is concerned with a limited range of basic HR concerns, such
as salary administration. This is handled by line managers. Stage two implies the
establishment of an HR function, as the organisational development is characterized by
dynamic growth and line managers need assistance with e.g. finding and training the
right people. Growth continues and stage three is characterized by professional
management and advanced analytical tools for HRM. Stage four implies diversification,
decentralisation and coordination. At stage five HRM is recognized as everyone’s job, as
the focus is on flexibility, adaptability and integration across business units. Baird and
Mashoulam (1988) believe that each stage incorporates and builds on the previous
stages and that HRM activities are most effective when the stage of development
matches the stage of development of the parent organisation.

Consequently, it could be argued that organisational growth is likely to have an impact

on the activities undertaken by the HR function and furthermore also on the role of the
function as such. Correspondingly, Tyson and Fell (1986:15) argue that the state of
development of the organisation is one of the chief variables for determining the kind of
personnel function in an organisation. Thus, depending on e.g. age and size the HR
function is likely to focus on different activities. Nevertheless, Hendry and Pettigrew
(1992) point out that there is no automatic relationship between the organisational life-
cycle and HRM, further arguing that HR functions might very well stagnate, while the
rest of the organisation continues to develop. The argument is based on the fact that
numerous firms in the past have grown, matured and died, without ever developing the
characteristics of HRM. In fact, HRM cannot be understood by simply an internal
perspective, as it is concurrently affected by multiple factors, both internal and external
(Hendry and Pettigrew 1992).

The process of internationalisation is regarded a factor that might influence the role of
the HR function. Pucik (1992) argues that globalisation brings the HR function closer
to the strategic decision-making in the organisation and furthermore changes the scope
and content of HRM. The rationale behind the argument can, according to Pucik
(1992), be summarized into four new challenges facing the HR function of a globalised
organisation, namely: 1) reconciliation of the need for global centralisation with local
 34

decentralisation; 2) integration; 3) adaptation; and 4) the accommodation of

organisational networks, alliances and partnerships. Hence, the essential role of the
global HR function becomes to encourage maximum adaptability and coordination, by
focusing on activities such as management development, evaluation and compensation
(ibid).

Evidence indicates that organisational change processes, such as downsizing, provide

opportunities for HR to strengthen its strategic role (Sahdev et al., 1999). Likewise,
Monks (1993) found that technological upheavals or rationalisation often trigger
organisational change, which furthermore leads the HR function to adopt increasingly
complex HRM practices.

Organisational culture is a phenomenon that has received vast scholarly attention (e.g
Schein 1985), and it is widely accepted that it has an impact on organisations. A vast
number of scholars have examined HRM in connection with organisational culture. For
instance Hartog and Verburg (2004) related HRM practices and organisational culture
to firm performance, while Chan et al. (2004) looked at HRM practices and
organisational culture in relation to competitive advantage. Research on the effects of
organisational culture on HRM appears, however, to be scarce. One exception is the
study by Aycan et al. (2000), which focuses on the impact of culture on HRM, stating
that organisational culture is constituted by shared beliefs and assumptions that
directly influence HRM.

Relatedly, Bartlett and Ghoshal (1989) have discussed the impact of administrative
heritage on HRM. According to their definition (1989:37-38), administrative heritage
is “the organisation’s configuration of assets and capabilities, built up over decades, its
distribution of managerial responsibilities and influence, which cannot be shifted
quickly and an ongoing set of relationships that endure long after any structural
change” and it was found to be an important influencing factor in every organisation
they studied.

Hendry and Pettigrew (1992) discussed business output as an influencing factor,

stating that firm performance affects the perceptions of the inner environment. The
financial situation is regarded an influencing factor, as for instance general cost-
cutting is likely to hit each and every support function -- as noted above rationalisation
is found to have an impact on the dealing with HR issues (Monks 1993).

Legge (1978) brought forward business goals and objectives as influencing factors. An
HR function that plays a strategic role will be affected by the business. Even an
administrative HR role is affected by the organisational performance. Combining
organisational culture with business objectives, further reflecting on intra-
organisational areas that are believed to be business crucial, Legge (1978) argues that
these preferences are likely to affect the HR function. In relation, the definition,
measurement and evaluation of success are believed to be a consequence of priorities,
and have consequences on HR. (Legge 1978)

The business strategy is an inner factor that ought to influence all of the organisation.
Depending on what the strategic goals and objectives of the organisation are, the tasks
of the HR function are likely to vary. Business strategy can be thought of as a set of
decisions about the direction of a firm (Bird and Beechler 1995:25) thus indicating the
areas that are believed to be crucial for success, and hence which areas to invest in. The
company budget, as a reflection of the strategy, is assumed to have an impact on the
HR function and the activities undertaken within it.
 35

In a Chinese study, Wei and Lau (2005) argue that previous research seldom has
addressed the factors that are likely to influence a firm’s adaptation of strategic HRM.
They tested the impact of market orientation, HRM competence and HRM importance
on the adaptation of SHRM, and found evidence that Chinese firms with higher market
orientation, HRM competence and HRM importance were likely to adopt SHRM.
Furthermore their study showed a positive correlation between size and ownership on
the one hand, and the adaptation of SHRM on the other, but the effect of company size
and ownership as moderators were not significant (ibid). Hence assumingly growth per
se does not lead to SHRM, but might increase the need for e.g. a competent HR
function which in turn is likely to develop the existing HRM towards SHRM.

The organisational factors discussed in this section seem to be closely related not only
to each other but also to some extent to those of the outer context. For instance, the
financial situation of the organisation is likely to be affected by the economic cycle,
while the business strategy perhaps builds on the prevailing competition. Hence my
thesis acknowledges the complexity of the inter-relations of the various influencing
factors, nevertheless, making a conscious choice not to further theorise on the inter-
relations, as they are regarded to be out of the scope of my thesis.

For the purpose of this study, I cluster the factors discussed above and divide the
organisational level of the inner context into five factors, namely 1) administrative
heritage, 2) business strategy, 3) degree of internationalisation, 4) financial situation,
and 5) organisational organic growth. The administrative heritage is grouped together
with organisational culture; business strategy includes the discussion on business goals
and objectives as well as on organisational change; degree of internationalisation is a
factor of its own; firm performance is included in financial situation; and the
organisational growth includes elements of the organisational life cycle. The
simplification is believed to reduce the amount of overlapping. The rationale behind the
attempt to reduce overlap is the desire of creating a check list that is a well structured
and useful tool for analysing factors that affect the roles played by the HR function. The
list of influencing factors is summarised in table 8.

2.5.2.2. Individual factors

Attitudes, expertise and credibility are elements among others that are likely to affect
the roles played by the HR function. The factors discussed in this section occur on an
individual level, discussing the attributes of HR professionals on the one hand and their
role set20 including line managers and chief executives on the other.

Sheehan (2005) argues that there are two particular factors affecting the possibilities
for the HR function to change its role to become more strategic. These are (1) the
capabilities of the HR professionals, and (2) the commitment of the CEO to HRM.
Empirical evidence suggests that the broader the HR professionals’ business experience
base the bigger influence will HR have on business strategy. Further research results
imply that the CEO’s stance on HR issues is likely to have an impact on the role of the
HR function, as tangible support for HRM initiatives are not likely without a
commitment on the part of the CEO to the value of HRM.

Legge (1978) pointed out that the attitude of the executive management regarding
HRM affects the HR function. A positive attitude towards HRM does not automatically

20 For a definition of role-set see chapter 2.1

 36

imply an important HR function. Instead the management team might chose to carry
the strategic HRM responsibility themselves while the HR function handles functional
tasks. Therefore, the role of the HR function is not by definition an exact reflection of
the status of HRM in that particular organisation.

It can certainly be argued that the expertise of the HR function will affect the role of the
function. According to Jenkins (1973) the lack of status within the HR function leads to
staffing problems as the most talented managers will head elsewhere, leaving the HR
function with less talented managers. Consequently, the function will remain in low
regard because of its relative lack of talent. Legge (1978) regards the problem a viscous
circle, where lack of status and lack of talent render the HR function unable to make
any progress. Also Truss and associates (2002) support the belief that the capabilities
and personalities of the HR professionals as well as the amount of corridor power HR
professionals possess are likely to affect the role formulation of the HR function.

HR specialists’ lack of talent has been discussed by several scholars (e.g. Jenkins 1973;
Legge 1978; Guest and King 2004). Regardless of what the reason behind the lack of
expertise are, HR managers have been criticized for being reactive, passive, risk-averse,
and lack business orientation (Ritzer and Trice 1969).

Assuming that the role is a social construction, the HR professionals need to prove that
they are making a contribution in order to change the role of the HR function. First
they need to perform well against current expectations of the role in order to achieve
what Tsui (1984) calls reputational effectiveness, and second, they have to promote a
change in the expectations of the role-set members (Truss et al. 2002). The third step
would be to perform in accordance with the new expectations. This thesis addresses the
question of whether the merger situation constitutes such a setting when and where the
HR function can manage to achieve reputational effectiveness through its conduct and
input in the preparing and/or implementation of the deal.

Stiles and Trevor (2006) argue that power and influence affect the HR role, as HR is
given a seat at the table only when the basic HR practices are performed efficiently and
effectively (see also Gratton et al. 1999). Already in 1978 Legge noted what she called a
viscous circle with regards to HR’s lack of power. She stated that HR’s lack of power
and centrality to decision-making results in the exclusion of HR in strategic planning,
also concerning issues relevant to people management. When problems occur they are
handed over to HR, which becomes engaged in crisis management rather than strategic
activity. As a result HR is regarded as ineffective and remains in low regard among
senior line managers, and will remain excluded from the strategic decision-making
process in the future. Furthermore, the HR specialists strengthen the understanding
line managers have of HR as a patchwork function, as they compliantly remain reactive
and are willing to respond to every knock on the door. This, argues Legge (1978), is a
consequence of the uncertainty about the success criteria of HR and hence the lack of
prioritisation.

Relatedly, Legge (1978) furthermore state that the possibility for a manager to
implement the policies he believes in depends on the degree of power he possesses. The
power is a result of both organisational and individual factors. Hence, also Legge (1978)
addressed power and authority as determinants of the personnel management.

Truss and associates (2002) argue that the role of the HR function is dependent on a
large number of factors, both internal and external, but it is not to forget that one of the
foremost reasons for change is the will of the HR professionals to change the role of the
 37

function. They state that the HR professionals have first to identify the need for change;
second to want to change; and third to act accordingly to implement the change. Also,
the argumentation that the HR function can manage to change its role is in the first
place based on the premise that the HR professionals within the function are able to
decide on how they spend their time and which activities they emphasise, and thus are
able to alter the role (Truss et al. 2002).

Ulrich and Brockbank (2005a) argue that HR competences have an important impact
on the roles the HR function play, stating that competences are the central
instrumental mechanism for transforming HR (2005a:221).

In this section, the personal attributes of the HR director and HR specialists have been
discussed, using a wide variety of terms, namely capabilities, expertise, credibility,
talent, skills, competence, personality, corridor power, authority, power and influence,
and reputational effectiveness. In previous academic work scholars have hence used
different terms when discussing related issues. My study will overlook several of the
differences in definitions and use two terms only, namely HR competence and
reputational effectiveness. These two terms are broadly defined and argued to cover
the lot of factors listed above.

According to Caldwell (2008) the definition of competency includes the underlying

characteristics, i.e. motive, trait, skill, self-image, social role and/or body of knowledge,
of a person. Elaborating on that definition I chose to use competence as a general term,
as I regard it a fairly broad term which can be argued to grasp the essence of
capabilities, expertise, talent, skills, and personality. Inversely it can be argued that
none of the other above mentioned terms can be defined as broadly as competence can.

Reputational effectiveness (Tsui, 1984) is in this study likewise interpreted broadly,

also covering the meaning of corridor power, authority, credibility, as well as of power
and influence. The terms referred to (corridor power etc) are, as interpreted by this
study, in the eyes of the beholder. Thus, they are argued to fall into the definition of
reputational effectiveness as reputational effectiveness is said to be dependent on the
ability to meet the expectations and demands of its role set (Ferris 2007).

In addition to competence and reputational effectiveness which are discussed with

reference to the HR function/director, the influencing factors on the individual level
include characteristics of the members of the top management team and/or the CEO.
The stance of the CEO regarding HRM and/or the HR function has above been
discussed as either commitment or attitude. I will in this thesis discuss the attitude of
the CEO and/or top management as an influencing factor.

2.5.3. Merger specific influencing factors

Mergers and acquisitions are an increasingly popular vehicle for internationalisation of

companies. There are a number of reasons for pursuing cross-border M&As, among
others the achievement of competitive size and increased market share by adding
brands and distribution channels (Evans et al., 2002). Also, M&As are a relatively fast
method of responding to pressures of globalisation.

A merger can be divided into a number of stages. The pre-merger/pre-combination

stage consists of bidding negotiations and due diligence, and ends in the signing of the
deal. This early part of the merger process is regarded very sensitive and is generally
 38

kept secret involving as few people as possible. It is succeeded by the combination

phase, during which the integration planning proceeds. The latter part of the merger,
the post-merger integration/post-combination phase, is a lengthy process when the
new organisation settles in (Marks and Mirvis 2001).

Without exception, M&As involve change for both parties involved, which in turn
demands good understanding and smooth management of the processes. In M&As the
need for good management skills is put to its extreme, and therefore I argue that M&As
create an interesting setting for HRM research. Also, as mentioned above, the change
scene of a merger constitutes an interesting setting for studying the possible
reformulation of the HR function.

The merger situation is arguably part of the organisational level, i.e. the inner context.
In this study the merger context is however dealt with separately, as the study makes a
distinction between the HR functions of mergers and non-mergers as well as between
pre- and post-merger HR functions. Hence, parts of the data sample by definition lack
the merger experience while part of the sample literally possesses that experience. The
study sets out to identify the effect of the merger on the HR function.

Antila and Kakkonen (2008) investigate HR managers’ involvement in M&As, looking

for factors affecting HR managers’ participation in the merger process. They note that
very few previous studies address the factors explaining the roles of HR in a merger
context. Björkman and Søderberg (2006) touch upon the theme. They found evidence
for HR not being actively involved in the post-merger change process in the case
organisation they studied and argued that low expectations of top managers regarding
the strategic contributions of the HR function might have contributed to a lack of
involvement of HR. Also the priorities of the HR function to focus on intra-functional
matters retreat HR from the organisational change process.

Antila and Kakkonen (2008) argue that the M&A context differs from an ordinary
organisational setting in terms of the demands made on HR managers. The role of the
HR manager in M&As is in particular dependent on the HR managers’ credibility,
experience from previous M&As and ability to prove the importance of HR related
matters in the M&A process. Also the trust line managers hold towards the HR
manager is of utter importance.

To the best of my knowledge there are almost no in-depth studies on the possible
impact of a merger on the HR function, the study of Björkman and Søderberg (2003;
2006) being an exception. Section 2.3.2. above discussed mergers as change makers. A
merger affects the involved organisations as they suddenly grow in terms of turnover
and employees and possibly also in terms of degree of internationalisation (cross-
border mergers). In addition, a sudden change in organisational structure (integration
and centralisation vs. disintegration and decentralisation) might have an impact on the
role of the HR function. The power relation between the merged parties is also likely to
affect the integration. Depending on e.g. the type of deal (merger of equals vs. hostile
take-over) the way in which the power relations are handled will vary. The merger-
specific influencing factors have not received any previous scholarly attention and thus
my thesis will provide pioneer insight in this particular aspect of the inner context. In
the summarising check list presented in table 5 the following factors are listed: changes
in organisational structure, organisational growth (sudden), internationalisation
(sudden), and the power relation between merged parties.
 39

2.5.4. The complexity of inter-related influencing factors

When studying the impact of the context on the organisational culture, Legge (1978)
identified the complexity of the analysis. She argued that when considering how
different factors might influence organisational culture one needs to reckon that the
concepts are multi-dimensional and it may be necessary to differentiate which aspect of
the concept is thought to affect a particular aspect of behaviour.

Furthermore, the components of the concepts cannot be used as a checklist alone, as

the nature of the inter-relationships might determine the overall effect on the
dependent behaviour. (Legge 1978) The argumentation also applies in this study when
considering the impact of the above listed factors on the HR role. The list of influencing
factors summarised in table 5 will function as a checklist as the study analyses the
extent to which the factors are appearing in the data. Nevertheless, the study is not
restricted to discuss factors of the check list alone. Instead I aim at remaining open and
sensitive to factors that have so far not been mentioned/identified. The intention is to
let the data speak. Above, more than thirty possible influencing factors have been
discussed. In table 5 (summary of influencing factors) the number of factors listed has
been decreased to 16 to reduce the problems of overlap.

2.6. Summary of chapter two

The theoretical foundation of the research area is two-fold. First, possible role
formulations for the HR function were discussed. Based on previous research a new
framework consisting of five roles for the HR function was proposed. The complexity of
the area is addressed by Caldwell (2003), who remarks that early works have neglected
the complexity in their attempt to present neat frameworks.

Second, factors that might affect the role formulation of the HR function were listed.
This area of research is not yet very well developed. As inter-relations and overlap are
common among the factors listed, the final list, which the empirical part of the study
will build on, was narrowed down to include four factors stemming from the outer
context, five organisational factors, three individual factors and four factors referring to
the merger context.

The frame of reference is summarised into a figure (figure 5), visualising the pre-
understanding of the study. The roles of the HR function which are illustrated at the
top of the figure are affected by the influencing factors which are drawn beneath. In
addition, a table summarising the above discussed influencing factors is presented
(table 5).
 40

Strategic

Business Strategy
Partner Implementer

Proactive Reactive
Employee
Advocate
Process
Negotiating Engineer
Lawyer

Tactical

Influencing factors

Outer context Inner context Merger context

1. organisational
level
2. individual level

Figure 5 The pre-understanding of the study

 41

The table below is to be read as rows, not as columns, and it is presented using the
same outline as in section 2.5, namely first presenting the outer context, second the
inner context which is divided into organisational and individual factors, and thirdly
the influencing factors that are specific to the merger context.

Table 5 Summary of influencing factors

The outer x Economic cycle

context x Impact of other corporations
x Political and legal environment
x Technological development
The inner Organisational x Administrative heritage (/organisational culture)
context x Business strategy
x Degree of internationalisation
x Financial situation
x Organisational growth, i.e. organic
Individual CEO/ x Attitude regarding HRM
top management: and the HR function
HR professionals: x Competence
x Reputational effectiveness
Merger x Changes in organisational structure
specific x Organisational growth
factors x Internationalisation
x Power relation between merged parties
 42

3 RESEARCH METHODS

In this chapter, the empirical methods applied in the thesis are discussed. In brief, the
study adopts a multiple-case strategy including mostly qualitative data retrieved from
10 mergers and 4 non-mergers regarding the perceptions of HR professionals and chief
executives on the pre- and post-merger roles of the HR function. The data were
collected through in-depth interviews with 29 respondents.

3.1. Research design

As stated in the previous chapters, the aim of the study is to describe how the role of the
HR function evolves in the merger process, and to suggest factors that influence
changes in the roles played by the HR function. The study adopts an analytical
approach, assuming that there is an objective reality to be found (Arbnor and Bjerke,
1997). It is of explorative nature and aims at explaining variances. This implies that the
study seeks to improve the understanding of an unresearched area, and it does not test
hypotheses. In this section the methodological choices are presented and the way in
which they support the research aim is discussed.

3.1.1. Finnish-Swedish mergers

The context in which the HR function is studied is large-scale mergers. In order to

ensure a degree of homogeneity, which will facilitate the data analysis, a further
demarcation of the merger data sample, nevertheless, seems advisable.

During the last decade several large-scale mergers have taken place, both nationally in
Finland and cross-borders. Within the Nordic countries particularly the Finnish-
Swedish cross-border mergers have received a vast amount of attention due to the
increasing number of important deals. The joint history of Finland and Sweden, the
geographical nearness and resembling industrial structure of the neighbouring
countries set for a close cooperation. More mergers cross the borders of Finland and
Sweden are likely to take place, as an increase in European cross-border deals is
predicted (Platt, 2004)

Compared with the rest of the world, the cultural differences between Finland and
Sweden do not seem apparent (Hofstede, 1980). However, a recent study, which
focuses on a sole Finnish-Swedish merger (Vaara et al. 2003) points to the different
languages spoken in Finland and Sweden and to the different management styles. It
furthermore highlights the historical post-colonial relationship between Finland and
Sweden as strongly influential on the current relationship, in which the emotional is
still solidly present. My personal background and experience as a Swedish speaking
Finn who has lived, studied and worked in Sweden gives me a pre-understanding for
these cultural differences. Hence, a demarcation of the merger sample to constitute of
Finnish-Swedish large-scale deals is a natural consequence of both the previous merger
activity and my personal background.
 43

3.1.2. Mergers and non-mergers

Above, it has repetitively been argued that the merger setting is interesting as it
potentially implies change for the HR function. However, it is not evident how to
determine whether it is the actual merger or other related contemporary elements that
impacts the role of the HR function, as it is difficult to isolate the merger from other
potentially affecting elements within the context such as the economic cycle (see
chapter 2.5 – factors influencing the HR function).

To reduce the problem this study examines the causality by applying a quasi-
experimental matching design (Shadish, Cook and Campbell 2002). It implies that a
comparison group, which is similar to the researched population, is non-randomly
selected and added to the research sample (Sorenson, 2003). In the present study,
organisations that had not experienced mergers (hereinafter non-mergers), formed
such a comparison group. The comparison group consists of four non-mergers. The
non-merged organisations had to fulfil some criteria in order to be acceptable as
comparative organisations. First, regarding size they should resemble the merged case
organisations, however, the growth had to be mainly organic, with only a limited
number of smaller acquisitions allowed. Second, the industry should preferably be one
of those present within the merger-sample. Third, in line with the merger-sample the
non-merged organisations should be of either Finnish or Swedish origin. (For more
details on how the matching cases were selected see section 3.3.1). If the study finds
evidence that the role of the HR function in the merger sample develops differently
than in the non-merger sample one can assume that the merger context per se affects
the evolvement of the role.

Quasi–experimentation is traditionally found in quantitative research (Shadish et al.,

2002). As the purpose of the quasi-experimental design is to improve validity through
examining causality (Cook and Shadish 1994; Sorenson, 2003) it is however equally
useful in this study.

3.1.3. Case study approach

This study applies a multiple-case study approach, including ten focal cases and four
matching cases. A case is a phenomenon occurring in a bounded context (Miles and
Huberman 1994). Yin (1984) argues that case studies are preferred when the researcher
has little control over events, when the research focus is on a contemporary
phenomenon within some real-life context. Due to the explorative nature of the study,
a case study approach hence appeared very suitable. Furthermore, a case study allows
an investigation to retain the holistic and meaningful characteristics of real life events.

The focus of a case study approach is according to Creswell (1998:65) to develop an in-
depth analysis of a single or multiple cases. A single-case approach generally implies a
deeper insight in the case, while multiple-case analysis covers a broader sample.

In this particular thesis, the information gained when conducting the pilot study lead
me to choose a multiple case approach. For a further discussion on my reasoning see
chapter 3.2.
 44

3.1.4. Retrospective study

A process can be studied either real-time, as the process evolves, or retrospectively,

when the process is terminated. A longitudinal study allows real-time investigation
while ex-post studies rely on respondents’ memories. Despite that longitudinal studies
are regarded as excellent means of conducting high-validity research (Bitekhtine,
2005), the ex-post approach is applied much more frequently, as it is not as time
consuming as the longitudinal approach and access/consent is more likely to be
permitted.

The focus of this study is the evolution of the HR function, which in other words is a
longitudinal process. Pre-merger HR roles as well as post-merger roles are explored.
Due to the sensitivity of the pre-merger phase (see chapter 1) real-time insight prior to
the announcement of the deal is not possible. Hence, if conducting a longitudinal study
on the merger process, it would still not cover the pre-merger phase. The post-merger
phase on the other hand is a lengthy process of several years (Buono and Bowditch,
1989), which is time consuming to study real-time. As the time spent on a longitudinal
study furthermore would prolong the PhD process, the retrospective approach was
regarded as most suitable for this project. Nevertheless, future research might gain
from studying the merger process longitudinally.

A retrospective study of a longitudinal process implies that there is a time lag between
the actual event and it being researched. Huber and Power (1985) have argued that the
time lag may cause the respondents to provide inaccurate or biased data. First, as time
goes by, the perceptions of what actually has happened might blur. People have limited
and imperfect recall, and are furthermore likely to retrospectively regard events as
inevitable (hindsight bias), regardless of the predictions before the event. Also the
decision making processes might be described as more systematic and rational
(attributional bias) than they in reality were. (Bitekhtine, 2005; Huber and Power,
1985). Second, when researching a business organisation, there is a risk that the former
key players have left the organisation, and are difficult to reach ex-post, which implies a
survivor-bias (Bitekhtine, 2005). Thus, information about previous events might be
impossible to retain and things that have happened afterwards might affect the
respondents’ statements. How the potential bias issues were dealt with in this study is
discussed in chapter 3.3.1.

3.1.5. The research process

The starting point of this study is the existing literature, which was reviewed before
approaching the field. Based on the literature review some themes were selected
(appendix 1), which set the base for the pilot study. The pilot study was conducted with
a handful of respondents (see chapter 3.2). Thereafter, the data was analysed and some
parts of the literature reviewed afresh. As a result of the thorough literature review
combined with the pilot interviews, a conceptual framework was created. This
framework is presented in the summary of chapter 2, and serves as my pre-
understanding when conducting the main study. As the pilot study21 had a big impact
on the thesis and directed the work back to the literature before approaching the field
de novo, there are features of an abductive approach in the study. In abductive studies
the theoretical framework, data collection and analysis evolve simultaneously, and
hence the original framework is successively modified (Dubois and Gadde 1999).

21 For more information about the pilot study see chapter 3.2
 45

In the process of collecting the data, I spent nine months on maternity leave, which
prolonged the data collection correspondingly. When the data collection was
completed, I started the writing process, in chronological order from introduction
chapter to theory review followed by the methodology. Next the actual data analysis
was started, however yet interrupted by a second maternity leave which lasted some 18
months. Back again I reviewed my previous writings prior to continuing the data
analysis. Thereinafter, the writing of the findings and discussion took place, succeeded
by the conclusion. In table 5 the milestones of the research process are presented.

Table 6 The research process

Chronology Event
2003 Literature review
Winter 2004 Pilot study
Spring and summer 2004 Analysis of data from pilot study and revision
of the literature review
Autumn 2004 Conceptual model
Autumn 2004 Main study
Winter and summer 2005 Maternity Leave
Autumn 2005 Main study continues
Winter 2006 Writing the three first chapters
Summer and Autumn 2006 Data analysis and writing of case descriptions
(chapter 4)
2007 and Winter 2008 Maternity Leave
Autumn 2008 Data analysis completed
Autumn 2008 and Winter 2009 Findings and discussion

3.2. Pilot study

Conducting pilot interviews seemed advisable in order to gather basic information

about the field before imposing more precise methods and deciding on the final
research questions. Pilot interviews typically use a broad topic guide with as few direct
questions as possible (Fielding and Thomas 2001). This reduces the risk of neglecting
aspects that may not have risen from the literature, as the respondents are encouraged
to talk freely about their views on the area of research. A set of questions the pilot
interviews aimed to answer were: what kind of issues will the respondents raise; how
well will the respondents’ responses correspond to the conducted literature review; will
the issues raised differ from each other or will they be alike; and what kind of access am
I likely to be approved.

To begin the pilot study, a small number of case organisations, namely large-scale
mergers, had to be identified and approached. Five Finnish-Swedish mergers were
selected and in each and one of them one HR staff member on corporate level was
contacted. The selected pilot organisations were visible Finnish-Swedish mergers.
Three of them were among the thirty largest firms in Finland, and two of them had just
recently happened. Thus, they all visibly frequented the business press.

One HR professional from each and one of the pilot organisations was contacted, and
these five all agreed to be interviewed. The 100% response rate showed both a positive
 46

attitude towards academic research and a true interest in this particular area of
research. One of the pilot interviewees, a country-level HR director, reasoned that in
his position one and a half hour spent on an interview with a researcher is warmly
welcomed as the discussion potentially gives him new insights and ideas regarding his
own work. As an answer to the question of access and consent, he nevertheless, did not
believe that other members of his HR team would benefit from a similar interview, and
hence did not allow me to pursue a deeper case study of the organisation. However, he
welcomed me to contact his peer in Sweden.

Hence, the pilot study indicated a positive attitude towards participating in the current
research, but on certain conditions. Due to the difficulty of getting consent to a large
group of respondents within one and the same organisation, the conduct of a small
number of deep case studies was ruled out, while interviews with selected HR directors
and chief executives in a larger number of cases appeared easy to access. Therefore, the
sample was broadened not to cover only Finnish-Swedish mergers but to also include
Finnish domestic and Swedish domestic large-scale mergers. In order for the sample to
stay as homogeneous as possible it was not broadened any further.

Based on the data retrieved from the pilot study it seemed as if the roles played by the
HR functions in the merger context were different from case to case and that the HR
managers perceived the function’s situation during the merger in varying -- not to say
opposing ways. Something that one respondent took for granted, another respondent
thought about as utterly unrealistic. Hence, the need for a further collection of rich and
detailed data describing the variance of perceptions felt indisputable. Thus, the data
came to consist of interviews with one to four respondents in fifteen case organisations,
amounting at a total of 29 interviews.

The learning process of the pilot study was important and it certainly had a big impact
on the study. Prior to conducting the pilot study, the study focused on how the HR
function and its possible involvement in the merger process affects the merger. The
pilot study made me realize that my foremost interest lay within the HR function per se
and that the way in which the merger process affects the HR function was equally
interesting (as the way in which HR affects the merger) and that these two relations
were interrelated and preferably not separated from each other in the research. Hence,
the focus was broadened to cover both directions of the relationship between merger
and HR function, but also the research area was clarified to focus primarily on the HR
function and its development as a consequence of its relationship with the merger,
while the merger was defined as the broader context.

3.3. The main study

3.3.1. Choice of case companies and access

The current research applies a multiple-case design, including 14 cases. The focal group
constitutes of ten HR functions in large-scale mergers, and is accompanied by a
matching group of four HR functions in non-mergers that adds a comparative element
to the study.

Above it has been argued, first that the merger sample would consist of Finnish-
Swedish large-scale mergers (see section 3.1.1), and second, that the sample needs to be
broaden to cover also Finnish domestic and Swedish domestic large-scale mergers (see
 47

section 3.2). To summarise, the mergers studied constitute a seller originating from
either Finland or Sweden and a bidder likewise originating from either of these two
countries. As no Swedish domestic merger that fit the criteria was on fact found, the
case sample contains either Finnish-Swedish or Finnish domestic deals.

Also the complexity of conducting a retrospective study has been discussed above, and
it was noted that in such a study one has to rely on the respondents’ memories. The
more time that has passed the more difficult and less reliable the study becomes.
Therefore I wanted to restrict the case sample to mergers that are not older than ten
years or so, which led me to only include mergers that have taken place no earlier than
in 1995. The reasons for not restricting the age of the mergers any further were mainly,
a) that it would have risked diminishing the data sample, and b) the merger process is
lengthy and I wanted to include some cases that have reached the end of the post-
merger phase. It needs to be pointed out that the length of the time lags varies from
case to case and that the case organisations likewise were in different phases of the
merger integration process when the interviews were conducted.

The study set no restrictions concerning industry. As the population was being limited
by a number of other criteria, a further limitation of industries would have diminished
the population even more, and more importantly, there was no explicit need for such a
restriction. Regarding size, the case organisations had to be big enough to incorporate
an HR function. In practice it implied that organisations with less than 200 employees
would be excluded from the sample. The criteria for the case organisations are
summarised in table 6.

Table 7 Case organisation criteria

Seller Finnish or Swedish company

Bidder Finnish or Swedish company
Date of merger 1995-2004
Industry None specified
Size Big enough to have a visible HR function
Type of deal Merger with the intention of integrating the two firms to become
one

First, with the help of Talouselämä22’s table listing the top 500 companies in Finland
(www.talouselama.fi/te500list.te), fourteen large-scale mergers that fit the criteria
were identified. These had all been mentioned in the Finnish business press in recent
years. Second, with the help of the Mergermarket data base all acquisitions in Finland
and Sweden since 1995 were screened in order to find additional deals that would fit
the criteria. However, no additional mergers of interest for this study were found.

Ten of these organisations agreed to participate in the research. Among the remaining
four, two were never contacted, one refused due to lack of time and another refused due
to a lack of interest. The pilot organisations are part of this sample. The rationale for
not contacting two of the identified organisations was in fact that these had been
heavily exploited by fellow researchers and I thought it was in the best interest of the
Hanken School of Economics not to bother them further.

The study covers a vast percentage of the focal merger population and the sample is
therefore representative of the Finnish-Swedish merger population. The

22 Talouselämä is the leading Finnish economic journal.

 48

generalisability of a single in depth case study would have been limited, compared with
the current case study design.

The criteria for the matching cases were based on the final merger sample. As discussed
in section 3.1.2, the comparative group consisted of organisations of equal size,
operating in the same industries and originating from the same countries as the focal
case organisations. Five organisations matching the criteria were randomly
approached, and four of them agreed to participate. The company that declined to take
part cited a lack of time as the reason.

Due to the confidentiality agreement made with the respondents, no quantitative

figures such as turnover or number of employees regarding the case organisations will
be presented. Nevertheless it can be noted that all case organisations included in the
research employ more than 1000 employees and have a yearly turnover of at least a few
hundred million euro. They are all multi-sited, international organisations and among
the 200 largest corporations in Finland. In fact 12 of 14 case organisations (non-
mergers included) are among the 50 largest Finnish corporations. The 14 case
organisations operate in 5 different industries, namely paper and pulp; IT and
telecommunication; finance; machinery; and food industry. In order to retain
confidentiality, I do not reveal which corporation operates in which industry. The only
specification made in the case descriptions (see chapter four) is between production
and services.

3.3.2. Respondents

Three distinct groups of individuals were included in the respondent sample, namely:
(1) HR professionals in mergers; (2) HR professionals in non-mergers; and (3) chief
executives in mergers. Interviewing multiple persons within and regarding one case
enables respondent triangulation, which is regarded to increase the validity of the study
(Creswell, 1998; Miles and Huberman, 1994)23.

The first group, HR professionals in mergers, constitute the biggest one amounting to
two thirds of the respondents. As this group is focal to the research, the possible lack of
objectivity in their arguments needs to be taken into consideration. Huber and Power
(1985) have argued that a person’s emotional involvement with a topic may decrease
the accuracy of the responses, and that the inclusion of individuals with lower
emotional involvement in the study may be a means of dealing with the problem.
Hence, to reduce the risk of bias, other groups of respondents are included in the study.
The existence of the second group, HR professionals in non-mergers, is justified in
section 3.1.2, in which non-mergers are argued to be an important comparative group.
In order for the matching cases to serve as comparatives the respondents should
possess the same positions as the respondents in the focal cases.

In line with Huber and Power’s (1985) more general argument, Wright et al. (2001)
argue that namely HR professionals tend to rate the function’s effectiveness higher than
do line executives, and that this bias mainly concerns important and/or strategic
aspects of HR. Against this background it seems relevant to include another
comparative element, consisting of interviews with other than HR professionals,
preferably people with a view of the strategic aspects. Therefore, the last group, chief

23 The study is also subject to triangulation of data collection methods (see section 3.3.4.).
 49

executives in mergers, is included. The inclusion of this group also links back to the
discussion in chapter 2.1 on role-set theory.

Regarding the first group, HR professionals in mergers, the aim in every single case was
to meet with at least one person from both merged parties, in order to increase the
reliability of the study. In seven out of ten mergers this was possible. Nevertheless,
when booking the interviews it became evident that mergers disrupt the organisation
and that those who had been employed as HR managers prior to the mergers, might
have left the organisation or were still working within the organisation, but no longer as
chief HR executives, and were not willing to give an interview discussing HRM. Also, in
several cases the current HR director has joined the organisation after the merger, and
thus lacked experience of the pre-merger HR function.

The response rate remained high throughout the empirical study. Out of 37 contacted
individuals 29 agreed to be interviewed. In sum, the response rate was 78,4 percent.
Table 8 lists the pre- and post-merger positions of the respondents and shows the
number of interviews conducted in each case organisation. The names of the case
organisations are fictive, deriving from the international NATO phonetic alphabet,
starting with Alpha, Bravo, Charlie and so forth. Also the names of the respondents are
fictive. One respondent, Niina*, is mentioned twice in the table as she represented both
merger case 3 (Hotel) and non-merger case 1 (Whiskey), although she was interviewed
only once.
 50

Table 8 The respondents

Case Interviewee Pre-merger Post-merger Comment

position position
Charlie Lisa Head of HR Left the The interviewee’s involvement in
(Bravo) organisation as a the study reduces the risk of
consequence of the ‘survivor bias’ (Bitekhtine, 2005).
merger
Annika HR specialist HR specialist, Telephone interview.
(Bravo) business division
Pentti HR specialist HR specialist, HQ
(Alpha)
Paavo Secretary in top Member of top
management management
group (Alpha) group, HQ
DeltaEcho Magnus Head of HR (Echo) Head of HR, HQ

Birgitta Not employed by Head of HR The interviewee had no pre-

either merging (Swedish org) merger experience. Telephone
parties prior to the interview.
deal
Hotel Heikki Head of Head of
administration administration, HQ
(Foxtrot)
Paul Head of HR (Golf) Head of HR,
business division
Niina* Not employed by Head of HR, HQ First contacted as head of HR of
either merging non-merger 1, but the interviewee
parties prior to the soon became Head of HR of
deal merger 3 and was interviewed
with regards to both roles.
IndiaJuliet Tapani Head of HR Head of HR
(Juliet) (Juliet)
Ilkka Head of HR Head of HR (India)
(India)
Christian CFO (Juliet) CFO (IndiaJuliet)
KiloLima Tanja HR specialist HRD director, HQ pilot
(Kilo)
Camilla HR specialist HR specialist,
(Lima) business division
Erkki Member of top Member of top
management management
group (Kilo) group, HQ
MikeNovember Juhani Head of HR Head of HR, pilot
(November) Finland
Karl Head of HR (Mike) Head of HR, Telephone interview.
Sweden
Mats Member of top Member of top
management management
group (November) group, HQ
 51

Case Interviewee Pre-merger Post-merger Comment

position position
OscarPapa Päivi Head of HR (Papa) Made redundant The interviewee’s involvement in
during the merger the study reduces the risk of
process ‘survivor bias’ (Bitekhtine, 2005).
pilot
QuebecRomeo Marko Head of HR Head of HR, pilot
(Romeo) Finland
Mikael
Different Organisation and
managerial governance
positions (Quebec) responsible within
the HR function,
HQ
SierraTango Erik Head of HR Head of HR, HQ At the time of the interview the
(Tango) interviewee had taken a line
manager position within the
organisation.
Sören CEO (Tango) Deputy CEO, HQ
UniVic Tuulikki Head of HR Head of HR, pilot
(Victor) Finland
Gunilla Head of HR Head of HR, HQ
(Uniform)
Whiskey Niina* Head of HR First contacted as head of HR of
Whiskey, but the interviewee soon
became Head of HR of Hotel and
was interviewed with regards to
both roles.
X-ray Riitta Head of HR Although currently working
within a non-merger the
interviewee had experience from a
Finnish-Finnish merger.
Yankee Mika Head of HR Although currently working
within a non-merger the
interviewee had experience from a
Finnish-Finnish merger.
Zulu Kasper CEO, responsible
for HR at HQ level
Not included in Lotta Head of HR Finnish organisation lacking
the final data merger experience but possessing
material extensive acquisition experience.
analysed for The interview was excluded from
the study the analysed data because the
organisation did not fit into the
otherwise quite homogeneous
non-merger sample, due to the
high number of large
international acquisitions.

3.3.3. Interviewing

The bulk of the primary data consists of 29 in-depth interviews. Five of the interviews
were unstructured and conducted as part of the pilot study while the remaining 24 were
 52

semi-structured and carried out as part of the main study. The length of the interviews
varied between 40 and 100 minutes, with a median length of 80 minutes.

The interview guide was designed to support the research questions of the study: ‘What
are the roles played by the HR function before the merger and after the merger?’ and
‘Which factors affect the roles played by the HR function?’ All interviews were intended
to cover the same topics. In chronological order the merger process and its effects on
the HR work was discussed. First, the time before the merger was discussed, followed
by the merger integration and the post-merger experience. To form an understanding
of the roles played by the HR function at different points of time HR processes,
activities, and relationships were discussed. The questions asked included the
following: Which were the pre-merger/post-merger activities; when did the HR
function become involved in the merger process and what were the HR’s tasks; what
was HR’s relation to top management? Factors affecting the roles were not brought up
explicitly, but the respondents were repetitively asked to reflect on why the HR function
played certain roles or carried out certain activities and processes. The perceptions of
the respondents formed the base for the analysis. As all respondents did not represent
mergers, two interview guides (appendix 2 and 3) were designed. The interview guides
were used as aid-memoirs, to ensure that the main elements were covered, and not as a
form that would require high-disciplinary completion. In all but three cases the
interviews were carried out face to face. Among the face-to-face interviews, one was
conducted outside the respondents’ working place, the rest were carried out on site. As
one respondent at the time of the interview had no employer, that particular interview
took place at the Hanken School of Economics.

A minority of interviews, namely three, was conducted on telephone. The reasons for
not meeting with all respondents in person were geographical. On the one hand, the
telephone interviews profit from the anonymity, as there are no preconceived notions
based on the appearances. On the other hand, an extensive part of the communication
is lost as gestures and facial expressions are not caught.

When conducting interviews in autumn 2004 I was visibly pregnant. Surprisingly, my

big belly turned out to be the ideal icebreaker. Especially male respondents, whom I
met for the first time, asked me how I was feeling and openly told me about their wives’
or daughters’ pregnancies or about their babies. The usual first question, ‘was it easy for
you to find your way’, was replaced by ‘oh, you’re almost due – how have you been
feeling?’

The warm-hearted greetings made me speculate about the interviewees’ perceptions of

me as an interviewer. To the best of my understanding, there were both pros and cons
with my pregnant form. The upsides were assumingly that I was hardly seen as a
corporate spy looking for sensitive information; instead I was more of a vulnerable and
caring mother figure to whom it was easy to talk to. On the downside, I perceived that
my young age and female sex were highlighted, and my research skills might have been
questioned.

In order to reduce the risk of forgetting and misinterpreting what had been said during
the interviews, the interviews were - with the permission of the respondent – tape-
recorded and transcribed. As one respondent did not give his consent, that particular
interview was not recorded, instead written notes were taken.

All interviews were conducted in the respondents’ mother tongue, i.e. Finnish or
Swedish. As Swedish is my mother tongue and Finnish my second home language,
 53

there were no language barriers or other related problems. Although the majority of
respondents were Finns (22/29), more than half of the interviews were carried out in
Swedish (16/29) due to the high number of Swedish-speaking Finns in the sample.

3.3.4. Additional sources of data

The case study approach generally implies the use of multiple sources of data (Yin,
1984). Apart from accomplishing triangulation of respondent sources (see section
3.3.2) this study also allows triangulation of data collection methods. The interview
data is supported by secondary data, consisting mainly of documents and statistics.
Also some newspaper articles which were based on interviews with HR specialists from
the case organisations have been utilised. The articles have been published in Finnish
daily newspapers or weekly business magazines.24 Regarding the case organisations,
annual reports, information about company structure and HR structure are included in
the data set.

3.4. Data analysis

According to Yin (1984:99) the analysis of case study evidence is one of the least
developed and most difficult aspects of doing case studies, because there are few fixed
formulas or cookbook recipes to follow. Hence, the analysis depends largely on the
researcher’s own style of thinking (Yin, 1984). The data analysis of this study started as
soon as there was some data to analyse, i.e. during the first pilot interview. Analysing
the data has been a long mental process that has followed me in all my doings, more or
less actively.

On a concrete level, the data were analysed in different phases. The first phase implied
the analysis of the pilot study, in which data from five pilot interviews was compared
with each other. The second phase took place when all interviews were conducted and
implied separate descriptions of each case organisation. Categorising and putting data
in chronological order helps the researcher to get an overview of the data before the
actual analysis (Miles and Huberman 1984; Yin 1984). Indeed, highly structured case
reports appeared to be a prerequisite for further analysis. Based on the case
descriptions, separate within-case analyses were made. The third phase included a
cross-case analysis, in which the merger cases were first compared with each other and
second with the non-merger sample. Systematically the individual HR roles were
matched with individual influencing factors in search for general patterns.

It is frequently argued that the researcher gains a lot of insight and reflects upon the
data when transcribing the interviews (Oliver, Serovich and Mason, 2005; Bucholtz,
2000) . Hence, it is often recommended that the researcher transcribes the interviews
her-/himself as a step in the data analysis process. Nevertheless, I deliberately
outsourced the transcription. The rationale behind my decision was the time saved, as
transcription is extremely time-consuming. To get a deep understanding of the data,
the tapes were listened to and the transcripts read numerous times.

To ensure that all relevant data were included in the analysis, the transcripts were
systematically dealt with multiple times. Before the writing process all relevant sections

24 Due to confidentiality agreements the newspaper extracts cannot be further specified as they would

reveal the case corporations. In the case descriptions in chapter four, it is however mentioned in which
cases this kind of additional sources of data is used.
 54

were coloured with different colours depending on theme; during and after the writing
yet another colour was used to tag the parts that had been discussed in the text.

The categories and chronology used followed that of the interviews and the same out-
line is visible in the theory chapter (chapter2) and in the case descriptions that are
presented in chapter 4. The different stages of the merger were dealt with separately
analysing first the pre-merger setting, next the integration phase and last the post-
merger setting. Within these different points of time, the five different HR roles and the
numerous influencing factors presented in chapter two were sought for in the
transcripts. The check list of influencing factors was regarded an important tool, which
ensured a certain level of thoroughness. Yin (1984) argues that relying on theoretical
propositions, which I did, is the preferred strategy when dealing with case studies.
However, equally important, I tried in addition to the structured data analysis, to
analyse each and every interview without thinking of the check list. I wanted to remain
open-minded and let the data speak to me. When basing the analysis on a theoretical
framework, the researcher is likely to focus attention on certain data and to ignore
other data (Yin 1984). My aim was to broaden the understanding of the researched area
and hence I wanted to remain sensitive to unexpected results.

3.4.1. Letting the data speak

In the analysis, the HR functions studied are placed in different roles based on my
interpretation of the data at my disposal. My judgment of the extent to which the HR
function plays a certain role is based on a number of factors that vary from case to case
based on the data on the case in question. There is no particular check list of factors
that need to be identified in order to place an HR function in a given role, although
there are some common guidelines.

The analysis of the roles of the HR function was two-fold. The first part was to identify
the roles, and the second was to place the roles in the two-dimensional framework.
First, the HR activities and practices mentioned by the respondents helped me to form
a basic understanding of the kind of roles that might be found. For instance, the
administration of fire drills and the screening of job applications suggest an
administrative role, while participation in corporate merger integration planning points
to a more strategic role. Second, the extent to which the respondents stress the different
activities and practices indicate their perceived importance. Nevertheless, the HR
activities and practices alone do not work as a check list because the content and aim of
a certain activity might vary. For example, management development might in one
corporation be a strategic activity with the HR function actively involved in the
planning phase while in another the input of the HR function might be mostly
administrative.

To increase the understanding of the roles played other elements were added to the
analysis, bearing in mind the two dimensions of the framework (strategic vs. tactical
and reactive vs. proactive). First, the formal position (whether or not s/he was a
member of the top management team) of the HR director was one indication of the
roles played by the focal HR function. Second, the groups of people that the HR
director is reported to be dealing with in his/her daily work (e.g. line managers, top
executives, HR staff) add to my understanding of the informal relationships and roles
that might be played. Third, the way in which the HR directors talk about ‘we’/‘us’ - as
the complete organisation, the top management team or the HR function alone - gives a
hint on the extent to which the HR function plays a business partner role. Fourth, the
 55

ways in which respondents talk about their own reaction to the merger news tells us
something about the attitude of the respondents. An HR director arguing that his
“reaction when the merger took place was to be scared and wait and see what happens”
is seen as less proactive than his peer who says the her “first task was to get the
employees out of their beds in the morning, to motivate them and to make them feel
good about their work”. Fifth, the responses made by respondents from the top
management team added to the understanding of the roles that were played. Sixth, the
influence the HR function was said to have on decisions and activities taking place in
the corporation also increases my understanding of HR roles.

As a final remark, the conclusions that have been made about the different HR
functions and the roles they played are based on different kind of data in the different
case organisations, partly reflecting differences in how the respondents talked about
the HR function and what the most central issues of the HR function were.

The limitations of the chosen methods are discussed in the concluding chapter.
 56

4 WITHIN-CASE DESCRIPTION AND ANALYSIS

This chapter presents the HR functions of the ten merger cases and the four non-
merger cases. The cases are presented one by one in sections 4.1-4.11 so that all non-
mergers are dealt with in the last subchapter (4.11). As noted in chapter three, the
names of the case organisations are fictive, deriving from the international NATO
phonetic alphabet, starting with Alpha, Bravo, Charlie and so forth. Also, the names of
the respondents are fictive. Due to the confidentiality agreement made with the
respondents, the industry of the organisations will not be revealed, nor will any exact
figures concerning e.g. turnover, employees and date of merger be reported.

The description and analysis of the cases follow the same structure. First some
background information about the merger in question and the respondents of that
particular case is presented. Second, the pre-merger HR functions of both merger
parties are described separately. Then the integration of the two firms is described,
followed by a presentation of the post-integration. The descriptive part is followed by a
within-case analysis. Both the two pre-merger HR functions and the post-merger HR
function of every single case are analysed separately; the various roles that seem to
have been played in the three different settings are examined and the factors that
appear to have influenced the roles are analysed. Each setting is illustrated with a figure
presenting the identified roles and a table summarizing the influencing factors.

As the interviews have been conducted in either Finnish or Swedish the quotes used are
translations. The translations are my own and I take full responsibility for their
accuracy.

4.1. Alpha acquires Bravo and becomes Charlie

The description and analysis of the current case is based on data retrieved from four in-
depth interviews and all annual reports from one year before the merger until five years
after. The interview respondents represented both parties of the deal including the HR
function and the top management team. Two respondents possessed long experience of
the acquiring firm Alpha, one within HR (hereinafter HR Alpha) and the other as
executive vice president and head of M&As (EVP Alpha). They both worked at the
headquarters (HQ), with the latter also serving as the secretary of the Alpha top
management team and member of Charlie management group for a period of time (see
Table 1 Milestones of the Charlie merger). The two other respondents represented the
acquired party Bravo. One held the position as head of HR at the time of the
acquisition, including a seat on the Bravo top management team (hereinafter HR
Bravo). She had, however, left the organisation a few months after the acquisition and
was hence no longer working within the case organisation at the time of the interview.
The other representative of the acquired company had prior to the deal been employed
as a controller and after acquisition was offered a job as CFO of one of the sales
organisations including HR responsibility (HR Charlie).

The merger took place when the Finnish Alpha acquired the Swedish Bravo. Both
parties were active in the same manufacturing industry. The acquisition implied that
the number of employees grew by more than 20% and the degree of
internationalisation increased significantly. Legally and financially it was an acquisition
as Alpha purchased the entire stock of of Bravo’s shares. The intention of Alpha was to
combine the two and to emphasise the birth of a new international organisation Alpha
changed its name to Charlie.
 57

The rationale behind the acquisition was Alpha’s expectations of strengthening its own
position in its highly competitive business area. Following the deal Alpha proclaimed
itself to be the number 1 actor in Europe (newspaper extract25).

Table 9 Milestones of the Charlie merger

Date Event
Day 1 Alpha acquires Bravo (signing of the deal).
3 months EU competition authorities approved the deal.
9 months Head of HR at Bravo leaves the organisation.
14 months The new name Charlie is launched
A new head of HR and Communications joins Charlie
and gets a seat in the top management team.
20 months Charlie reforms the organisation.
22 months New CEO appointed and top management team gets
restructured.
40 months Charlie reforms the organisation.
52 months New CEO is appointed.

4.1.1. Alpha’s pre-integration HR function

Prior to the merger, Alpha had – according to the interviewees – a traditional,

administrative and rather invisible HR function. Expectations for the HR function were
low. The HR professionals had begun their careers in manufacturing, and they were not
expected to be able to contribute on a strategic level. The top management group did
not expect any business input from the HR function, as they regarded the head of HR to
have the wrong profile for such work.

Executive Vice President (EVP) Alpha: Why include someone in the management team who does
not understand the ‘language’? He would have done nothing but twiddle his thumbs.

HR Alpha: The exclusion of HR from the management team reflected the view of Alpha’s
management team according to which HR’s role was not important.

Although Alpha was an international organisation with business activity outside

Finland, the HR function was domestic. All respondents felt that the HR professionals
of Alpha did not possess the skills to run HRM internationally because of their
administrative background, nor did they have the language skills needed for
communicating with others than Finnish speakers. It seems as if the sole thing within
Alpha that suggests there was an HR function, with other than pure administrative
duties, is the title of the HR director.

EVP Alpha: Those days the international input of the HR function was not large, partly because
of the people working within HR, their personalities or the profiles, or how should I put it. They
did not have that kind of competence, and had sort of risen from the plant floor. When the size of
the organisation doubled, some 12-18 months after the deal, only then we [top management
team] began paying attention to this.

Prior to the deal, the corporate HR team consisted of three persons: the HR director,
who was mainly working with administration, industrial relations and employment
contracts, and two HR managers, one responsible for HR information systems and the
other for training and development. The HR systems mainly implied the coordination

25 Due to confidentiality issues, the source will not be further specified.

 58

and implementation of administrative tools such as payroll, while the training and
development function was regarded as a traditional education function catering for the
administration of blue-collar education. The HR director reported to the CEO of the
company, but was not represented in the management team. The HRM of that time was
reported to have a heavy focus on administrative tasks and industrial relations. It
seems as if the HR function was a rather traditional personnel management function26,
which in some respects emphasised the surveillance of employees as e.g. the
maintenance of employee registers was regarded as important.

HR Alpha: I was in charge of our HR systems, another guy took care of personnel development
and the HR director handled employment contracts, industrial relations and administration. The
three of us were the core function.

EVP Alpha: HR was heavily involved in the dialogue between the interest organisation and the
union, and also shepherded our domestic production units.

At Alpha, the group of people who planned the acquisition of Bravo was deliberately
kept small, due to confidentiality issues. One of the respondents was part of that group
and stated that when planning such a deal primarily legal and financial issues need to
be taken into consideration. The knowledge of the HR function is not needed at the
planning stage of a deal. According to the respondent, HR was not informed about the
deal until it happened. The members of the management team did not believe that the
HR director would be able to contribute to the discussion.

4.1.2. Bravo’s pre-integration HR function

Within Bravo, HR was an integrated and visible part of the core business. The HR
manager was a member of the executive team and regarded it as her task to run the
company jointly with the rest of the management team.

HR Bravo: I was in charge of HR, the CFO of finance, but as a management group we all shared
the responsibility for the good of the company and jointly worked on the company strategy.

The HR director argued that the HR function has to understand the business and
formulate an agenda for HRM which supports the business, and furthermore that a
competitive organisation needs to attract, develop and retain its human resources.

HR Bravo: HR is not, has never been, a separate HR function. HR is a very integrated part of the
business activity. There certainly are other ways of doing HRM, but not for me.

The corporate HR function at Bravo consisted of four HR specialists: 1) one responsible

for compensation and benefits, 2) one for organisation and management development,
3) one responsible for integration, and finally 4) the HR director who also worked
mainly on integration. Several administrative tasks, such as payroll, were outsourced,
and the legal affairs department offered support regarding employment contracts. The
key HR activities were designed to support the HR strategy, which in turn supported
the corporate strategy.

HR Bravo: There is a company strategy, which is supported by an HR strategy, and as part of the
HR strategy we have compensation and benefit issues. How can we ensure that we reward, that
we steer the behaviour and rewards in the right manner. Our compensation and benefits person
was responsible for designing the structures of our compensation system and also for practical
matters such as working with questions related to pension schemes and insurance.

26 For a discussion on the distinction between personnel management and HRM see chapter 2.2
 59

Organisation and management development implied working with human resource

planning. Issues like competence development, succession planning and attitude
surveys were handled by an HR specialist in charge of organisation and management
development. The total competence management process concerned each and every
one employed by the organisation.

HR Bravo: This person was responsible for the entire competence management process,
including training and development and career and succession planning regarding the whole
organisation. We wanted to be an employer who is aware of the thoughts and attitudes of the
subordinates in all different issues, so this person was also responsible for attitude surveys. We
worked a lot on our values, we wanted to roll out a joint company vision and organised
workshops and seminars around the topic. Much was done on cultural issues.

Prior to the Alpha-Bravo merger, Bravo had recently merged with a third party. In
learning about Alpha’s offer to acquire Bravo, the Bravo HR function was therefore
occupied with the integration work of Bravo and the third party. Integration was
regarded as a key activity for the HR function, and as noted above, apart from the HR
director who was involved herself in the integration work, there was a separate position
within the HR function focusing on integration issues.

HR Bravo: For 24 months we had worked day and night on the integration, communicating to all
employees internationally our way of doing business. Suddenly we were acquired by Alpha and
we needed to change the message.

At Bravo it was the board of directors who handled the pre-merger negotiations with
Alpha. The members of the top management team of the acquired party heard about
the deal when it was already taking place. Hence, the HR function of Bravo had no part
in the planning of the deal.

4.1.3. Integration

Alpha acquired Bravo and the Alpha people considered themselves the buyer. However,
Alpha chose to communicate to Bravo that the goal was to integrate the two firms and
not to take over. “The new name depicts the aspiration to build a strong corporate
culture consisting of several national cultures” (CEO, Charlie annual review).

The first and foremost task of the HR manager at Bravo was to make employees feel
secure and to attach them to the organisation.

HR Bravo: My initial work was to get the employees out of their beds in the mornings and get
them to the workplace, to motivate them and to tell them everything will be fine. I travelled a lot
to communicate that message throughout the organisation.

Second, the Bravo HR director stressed to the Alpha management group the
importance of getting an overview of the existing employee structure and a profile
description for key positions.

HR Bravo: On my initiative, a consultancy firm was employed to map the key players of the two
joining organisations, to suggest whom to place in what position. To avoid a Finnish-Swedish
battle, the consultancy firm chosen was Danish, with no former relationship to either Alpha or
Bravo. The consultants did an excellent job, but Alpha neglected it. Positions were filled based on
trust. And the Alpha people trusted their compatriots. Skills and competence had little to do with
it.

Despite the spoken message of the intention of integrating the two firms, the managers
at Bravo perceived the Alpha attempts to integrate as a takeover. Up front, the Alpha
 60

top management team communicated to Bravo that the two firms were about to be
integrated. According to Alpha, this attempt was underlined by the name change, which
was meant to communicate the will and the intention to create one united organisation.
However, it was according to the respondents also necessary to change the name as the
old very Finnish name was difficult in an international context. Also, Alpha kept talking
about an acquisition and underlined that Alpha was the buyer. At Bravo people soon
felt that the Alpha people were not willing to change their ways of doing things but
expected Bravo to do so, thus the Bravo people felt they were being taken over.
According to the respondents from Bravo, Alpha forced the Finnish system and
thinking on Bravo without taking the Swedish way of doing things into account. It
seems as if a common perception among the Bravo people was that the Alpha people
regarded themselves as the buyer, and hence the owner, who had the right to make
definite decisions.

HR Bravo: I have been involved in a huge number of organisational integrations, and I use to say
that one has two weeks time to decide on positions and to communicate the message. Regardless
of whether the message is that nothing will change or everything is going to change, you need to
be honest and quick, because people want to know what’s going to happen. Alpha did not do this,
they were not prepared, they did not know what they were buying, who we were and how we
were used to working. The two cultures were completely different.

EVP Alpha: The seller did not provide us any access to the HRM-crucial information until the EU
competition authorities had approved the deal, which in practice was 2-3 months after the
announcement of the deal.

The integration was admittedly unsuccessful. Many key players from Bravo, including
all members of the Bravo management group, left the organisation. Consequently,
important competence vanished. The HR Director at Bravo analysed the failure and
stated the following in the interview:

Alpha should up front have talked about a take over. Letting the other party believe it’s an
integration, when in fact it is a takeover, is to underestimate the other party. The fact that every
single person from the Bravo management group left, that’s a huge failure for Alpha.

The respondents from Alpha agree that the integration was unsuccessful and blame a
lack of preparation and of experience and competence. Furthermore, Alpha people
today seem to fear being ridiculed by Bravo.

EVP Alpha: I’m sure Lisa [HR Director Bravo] told you horrible things about our limited
readiness to deal with international HRM.

The involvement of Alpha’s HR function in the integration process seems to have been
limited. The information flow toward the employees was handled by the
communication department of Alpha. According to the respondent representing the
Alpha HR function, the most important HR system is the salary system, which did not
need to be integrated. On the contrary it was decided that the salary systems would be
kept separate for each country due to different legislation.

The HR function was reported to participate in the integration process by establishing a

European Works Council. By doing so, the HR function wanted to communicate to the
employees that the HR function unites all the people of the organisation. However,
establishing a EWC is statutory according to a EU directive for European organisations
 61

of a certain size, and surveilled by the European Foundation for the Improvement of
Living and Working conditions27.

4.1.4. Post-integration

Six months after the signing of the deal, the head of HR at Bravo decided to leave the
organisation. The HR Director of Alpha remained in charge of the HR function for
almost a year, mainly working as an HR coordinator. Due to a lack of competence in the
key languages, he was eventually moved to other duties. A new head of HR was
appointed 11 months after the signing of the deal, and he immediately became a
member of the top management team. The need for HR at the top management level
was identified during the merger process.

EVP Alpha: We felt our organisation did not handle HRM in the way it should. Especially our
CEO reckoned that[the inclusion of HR in top management] had a high priority.

During the first four years that followed the acquisition, the top management was
reorganised three times and the CEO was exchanged twice. The head of HR joined the
management group prior to these restructurings and was one out of two who survived
them.

The post-merger HR role seems to differ from both the Bravo and the Alpha pre-merger
HR roles, but to some extent resembles the former Alpha HR function. Bravo had an
important HR function, while Alpha did not. The four main duties of the new Charlie
HR function are 1) HR information systems, 2) pay and employment contracts, 3)
training and development, and 4) wellbeing and safety.

Post-integration, SAP28 was introduced throughout the organisation. For the HR

function it meant the unification of all record keeping and classification. Initially it
implied a lot of administrative work for HR, as all information needed to be gathered
and fed into the system. On the one hand, the HR specialist in charge of information
systems seemed proud of the new IT tool, arguing that this is the core of the HR
function, while on the other hand the other interviewed HR specialist seemed
frustrated by the administrative work load, as all current business needed to be
reported in the IT system.

HR Alpha: We have an extensive information system project going on, building an

administrative information system, that’s our top priority. It creates a united platform for the
common core of HR.

HR Charlie: I would like to get rid of our new HR system. We keep record of all employees,
almost asking for their shoe sizes, information you never need. It takes a lot of time and is very
complicated. It’s a SAP system and it is just so bad.

“Pay and employment contracts” is another resource-consuming function within HR.

The payroll is kept in house. The role of negotiating lawyer is crucial, as employment
contracts and industrial relations have priority. Safety and wellbeing are regarded as an

27 On 22 September 1994, the Council of the European Union passed a Directive (94/45/EC) on the

establishment of a European Works Council (EWC) or similar procedure for the purposes of informing and
consulting employees in companies which operate at European Union level.
28The acronym stands for Systeme, Anwendungen und Produkte in der Datenverarbeitung ("Systems,
Applications and Products in Data Processing"). SAP AG, which is the official name of the company,
provides comprehensive business software.
 62

important HR activity. However, as one respondent stressed, there is neither time nor
money for soft issues. Safety and wellbeing are all about the administration of
everything from fire drills to health care.

Since the arrival of the new HR director, the tasks of the HR function have expanded to
cover also development discussions, performance evaluation, performance-based pay
and the building of career paths for key players.

The executive vice president of Charlie gave his view on things that have changed
regarding HR since the appointment of the new HR director:

Now we have specific systems, incentive schemes and bonuses for executives, appraisal-
discussions for employees, and systems for looking at the organisation in an all-encompassing
way, and who should we try to promote, which individuals are good, how should we enhance
their career development considering our financial situation, and a value creation and corporate,
whatever it is, you know, this ethical thing, tell me, what is it called [corporate and social
responsibility].

The Charlie HR function is a matrix organisation with HR specialists responsible for

different business areas on the one hand and different HR tasks on the other.
According to one respondent, who is himself responsible for HR information systems
and also the HR manager of both one business area and of the HQ, the matrix makes
the work too disintegrated and there does not seem to be time to focus on anything.

HR Alpha: Every fifteen minutes there’s a knock on my door needing my immediate attention.

The administration seems to have watered-down the HR function, so there is little time
to perform any other HR role. Looking ahead, HR’s vision is to integrate line managers
with HRM, but the respondent from the HQ HR function does not know how they will
manage to do that.

HR Alpha: We will have to create such efficient tools and processes that line managers realize the
upside of them. Yet I do not know how we will be able to do that.

The reason for wanting to integrate line managers with HRM is the belief that every
organisation can purchase the same tools, but the efficiency is achieved by people, and
it is the line managers who have the knowledge about the people and their competences
and development needs. Hence, the aim is to let the line carry the employee advocacy
responsibility, while HR would function as a business partner designing strategically
important tools.

HR Alpha: HR’s vision? [long silence] You mean the direction in which HR is striving? We
definitely want HRM to be a part of line managers’ work. To date, everything linked to humans
and dealing with human beings in our industry has been regarded as a task for HR specialists.
But we want to create processes and tools with which we [HR specialists] can support line
managers in their work. Line managers should understand that people are one of their tools; in
the past they have been used to handling nothing but machines.

4.1.5. Analysis of case Charlie

This section aims at identifying the pre- and post-merger HR roles as well as the
influencing factors. The analysis is followed by summarising figures and tables.
 63

4.1.5.1. Alpha pre-merger HR roles

The HR activities presented in 4.1.1 suggest Alpha’s HR function mainly worked with
administration. The process engineer role is recognized as the key element in the HR
function. Signs of the negotiating lawyer role are noticed, however not in their initial
proactive way. The data in this thesis on the ways in which industrial relations were
handled are limited. Nonetheless, there is nothing in the arguments made by the
respondents that would indicate a proactive role. The HR director’s prime interests
were reported to be industrial relations and administration. There seem to be no
evidence for the business partner, the strategy implementer or the employee advocate
roles.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Process
Advocate Engineer

Negotiating
Lawyer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 6 The roles of the Alpha pre-merger HR function

4.1.5.2. Alpha pre-merger influencing factors

Individual level. Alpha’s HR function was characterised by low perceived

competence, lack of ambitions and language skills and an inability to demonstrate its
worth. However, the inability was in line with the expectations of the management
group, which did not seem to wish for anything else. This corresponds to the role set
theory presented in chapter 2.1, according to which performance is comparable to the
expectations of the role set. The management group’s adverse attitude regarding the
HR manager is reflected in the argument by the EVP:

Why include someone in the management team who does not understand the ‘language’? He
would have done nothing but twiddle his thumbs.
 64

The argument simultaneously supports the assumption that the reputational

effectiveness of the HR professionals is low, as the management group neglects the HR
function. A resulting question is why were the expectations of the CEO/management
team regarding the HR function low?

Organisational level. The answer seems to be found in the company history and the
administrative heritage. Within the traditional manufacturing plants the HR function
had for years had an administrative role and administration was hence the key attribute
that distinguished HRM in that particular organisation. Furthermore, the experience of
the CEO/management team seems to have affected the role. Apparently, they did not
see any need for change nor any obvious advantage in a broader role for the HR
function.

Outer context. The involvement in industrial relations was at least partly a

consequence of the Finnish labour law legislation but perhaps more importantly an
outcome of the industrial relation norms that prevailed in this industry, hence referring
to both the legal environment and institutionalisation. Also, it appears to have been a
question of the HR director’s expertise and skills in the area.

Table nine summarises the factors that seem to have influenced the roles of Alpha pre-
merger HR function. The factors in bold type appear to be the most important for the
organisation in question.

Table 10 Factors influencing the roles of the Alpha pre-merger HR function

The outer x Legislation

context
x Other corporations
The inner Organisational x Administrative heritage
context Individual CEO / x Attitude regarding HRM
top management:
HR x Lacking competence
professionals:
x Lack of reputational
effectiveness

4.1.5.3. Bravo pre-merger HR roles

The HR roles played in Bravo differed extensively from those played in Alpha. As noted
in section 4.1.2, the HR function in Bravo had an important strategic input. The
business partner role appeared evident as both HRM and the HR function were truly
integrated with the core business. The HR structure and processes seem to have been
build in order to support the business strategy and the HR specialists appear to have
worked simultaneously on different levels. Hence, the strategy implementer role also
seems to have been fulfilled.

HR Bravo: There is a company strategy, which is supported by an HR strategy […] Our

compensation and benefits person was responsible for designing the structures of our
compensation system and also for practical matters such as working with questions related to
pension schemes and insurance.

The employee advocate role was not identified as a core activity, but it seems as if the
HR director was sensitive to employee commitment. The awareness of employee
attitudes was for instance stressed and when the Alpha deal was announced the HR
 65

director seems to have regarded it to be her duty to make employees feel good and safe
about their work, on a grass-roots level.

HR Bravo: My initial work was to get the employees out of their beds in the mornings and get
them to the workplace, to motivate them and to tell them everything will be fine. I travelled a lot
to communicate that message throughout the organisation.

With the aid of the legal-affairs department the HR function managed the negotiating
lawyer role.

Nothing indicates a central process engineer role. For instance, routine tasks such as
payroll were outsourced, and during the interview administration was not mentioned
as once, nor was record keeping or screening given any attention. Hence, a completely
tactical and reactive role does not seem to fit in the Bravo HR function. However, it was
stressed that the field of work was broad, reaching from the designing of strategically
important processes to everyday short-term issues. Hence, it appears as if the HR
function handled the process engineer role in addition to the more strategically
important roles.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive
Process
Engineer
Employee
Advocate

Negotiating
Lawyer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 7 The roles of the Bravo pre-merger HR function

 66

4.1.5.4. Bravo pre-merger influencing factors

Outer context. My interpretation is that the outer context had little to do with HR’s
role formulation.

HR Bravo: … why on earth should I manage HR differently during recessions and upswings? The
focus may shift, but the degree of importance of HR related questions remains the same. I refuse
to agree on anything else.

Organisational level. The organisational factor that seems to have influenced the
HR roles was the business strategy. It appears to have guided top management and
hence also the HR function, which was part of it.

Individual context. In Bravo it was argued that the role formulation of the HR
function is largely dependent on the CEO and his/her attitude regarding HRM.

HR Bravo: There’s no doubt about it, it’s a management question, it’s an approach, either you
understand it or then you don’t, and those who do, they know it’s a function that adds value on
the bottom line, it’s a CEO question.

In addition to having a CEO with a positive attitude towards HRM, Bravo also had an
HR director who had the competence and the professional skills needed to perform well
and thus managed to gain reputational effectiveness and credibility. The quotes show
that she had strong opinions and she did not seem afraid of making herself heard.

Table 11 Factors influencing the roles of the Bravo pre-merger HR function

The inner Organisational x Business strategy

context Individual CEO / x Positive attitude regarding
top management: HRM
HR professionals: x Competence
x Reputational effectiveness

4.1.5.5. Charlie post-merger HR roles

The post-integration role of Charlie’s HR function resembled the Alpha pre-merger

role. There was still emphasis on administrative issues including for instance the
introduction of a comprehensive IT-tool for record keeping. Handling pay and
employment contracts also implied some administration as the payroll was part of it.
The process engineer role appears to be the most central HR role in Charlie. The
negotiating lawyer role was stressed in Alpha, and during the integration this role was
further given weight by for instance promptly establishing the EWC. The new head of
HR and communication accentuated the link between HR and corporate strategy and
introduced a set of HR activities that were formerly not known in Alpha. Doing so, the
strategy implementer role was activated. The implementer was partly defined as
someone who reacts to business needs, which within Charlie seemed to have been the
case.

EVP Charlie: In the management team we use quite a lot of time discussing issues that Jari [HR
and communications director] raises. We have a new procedure, for instance the goal settings,
bonus schemes and other incentives are discussed quite systematically on a yearly basis. We
discuss HR issues much more frequently now than we did before.
 67

However, there appears to be limited evidence regarding HR’s input in strategy work.

EVP Charlie: My, sort of, relationship with HR is very, how shall I put it, very superficial.

EVP Charlie: Well, which is the egg and which is the chicken? My viewpoint is that first there is a
need and then there is a way to implement, and the need is identified by top management in 60%
of cases and the remaining 40% [by others] because there is also a competent organisation.

Pro-action was hence foremost expected by top managers. Although the head of HR
and communication belonged to the top management team, in the quote above, the HR
function was regarded as part of the ‘competent organisation’ rather than the top
management. Thus, the HR function was seen as reactive by top management, as
opposed to proactive. The business partner and employee advocate roles, which require
a proactive stance, seem to have been lacking from Charlie’s HR function.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Process
Advocate Engineer

Negotiating
Lawyer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 8 The roles of the Charlie post-merger HR function

4.1.5.6. Charlie post-merger influencing factors

The current HR role in Charlie was the result of several factors. First, the foremost HR
competence at Bravo left during the integration, and thus the most important know-
how of how HR was managed at Bravo disappeared from the post-merger organisation.
As none of the former Bravo top managers stayed in the organisation, the loss of know-
how was important. This may explain why the post-merger HR role to a higher degree
resembles the Alpha HR role.
 68

The merger context. The power relations seem to explain Alpha’s superior position
in decision making. Alpha was the acquirer and possessed the power to set the rules of
the game. Also, the administrative heritage/organisational cultures of the two
organisations differed and might to some degree explain the differing HR roles in the
pre-integration organisations.

HR Alpha: There has been a lot of work trying to unite the processes and get the package
together, but we are still not there. The cultures are so different, the backgrounds are long and
the ways of doing business are what they are.

It appears as if the HR director in Bravo took a leading role in the initial integration
discussions. Before she left the organisation, she suggested the mapping of key
positions including the design of position profiles, and also of the existing employee
profiles in order to fill the positions in an optimal way. Within Alpha one was not used
to HR having such an active role. Bravo’s active HR director supposedly made an
impact on Alpha top management, as she was offered the HR manager position in
Charlie, which she turned down. The timing of the installation of a new head of HR and
communications as a member of the management team also suggests that the attitude
of top management regarding the HR function shifted during the integration process.
Hence, Alpha management’s the understanding of the Bravo HR function seems to
have affected the way in which the top management viewed the HR function and thus
the HR function per se.

Organisational level. In the interviews, internationalisation was stated to have had

an important impact on the shift in the roles of the HR function. As the former HR
director of Alpha did not speak any foreign languages, the internationalisation of the
firm certainly affected his career. However, looking at the HR functions of Alpha and
Charlie, they do not seem to differ very much. The fact that some performance-related
HRM activities were introduced does not seem to be a direct consequence of
internationalisation. The administrative heritage seems to have affected the post-
merger HR role. Although the new understanding of Bravo’s way of managing HR lead
to some changes, the Charlie HR function still resembled that of Alpha, which appears
to have been a consequence of the strong administrative heritage.

Individual level. On the individual level, the competence of the new HR director
seems to have influenced the role of the HR function in Charlie, as he introduced new
HR activities, such as performance-based pay, which the former HR director had not
done.

Outer context. Factors regarding the outer context that might have influenced
Charlie’s HR function are primarily legislation and technology. The importance of the
negotiating lawyer role was at least partly a consequence of European legislation. The
heavy focus on IT tools, which required resources within the process engineer role,
might have been a consequence of the supply of IT software. Also, following
institutionalisation theory (see chapter 2.5.1) it may be suggested that the increased use
of certain IT processes/tools in competing firms may lead others to take the same tools
and processes in use.
 69

Table 12 Factors influencing the roles of the Charlie post-merger HR function

The outer x Legislation

context
x Technological developments
x Other corporations (Institutionalisation)
The inner Organisational x Degree of internationalisation
context
x Administrative heritage
Individual CEO / top management: x Attitude regarding HRM
HR professionals: x Competence
The x Power relation
merger
context
x Understanding of other organisation
 70

4.2. Delta and Echo merge to become DeltaEcho

The description and analysis of the current case is based on data from two in-depth
interviews and seven annual reports dating from one year before the merger until six
years after. One of the respondents is the current corporate head of HR. Prior to the
deal he held the position as corporate head of HR at Echo (hereinafter HR Echo). He
had been working within the organisation for two years when the deal took place. The
other respondent is currently a country level HR director, being responsible for the HR
function in Sweden (HR DeltaEcho), and joined the organisation almost two years after
the merger.

DeltaEcho was formed as a result of the merger between Sweden's Delta and Finland's
Echo, both active in the manufacturing industry. The decision to join forces and
become the Nordic region’s largest player in its own field was made against the
background of ongoing restructuring and consolidation in the industry during the past
decade. Post-merger DeltaEcho has a better position in the market and benefits from
economies of scale and synergies that improve profitability (annual review).

The term used for the integration was “pooling” which is primarily a financial term
indicating that two companies add together their assets, liabilities, and profits to create
a new, bigger company (see e.g. Lindenberg and Ross 1999). It also seems to have
indicated to the employees that it is a merger-of-equals with neither buyer nor seller,
but two equal parties. The two organisations were of fairly equal size regarding both
number of employees and turnover.

Table 13 Milestones of the DeltaEcho merger

Date Event
Day 1 Signing of the deal
13 months Almost all initial integration projects completed
25 months Anticipated synergies attained
29 months New CEO recruited internally as former CEO retired

4.2.1. Delta’s pre-integration HR function

Neither respondent possessed any personal experience from Delta’s pre-merger role as
one of them had been working in Echo prior to the merger and the other had been
recruited to the firm post merger. The perception of the interviewees was that the Delta
HR function was mainly administrative.

HR Echo: They [Delta] focused more on operative tasks than on development. There are few
things competence wise that have come from Delta. It’s Echo that has made the input in all
development matters, regarding also, logistics and marketing. Delta was listed on the stock
exchange and emphasised cost control.

When collecting the data, a person who had been working with HR issues in Delta pre-
merger, and was still employed by DeltaEcho, was approached for an interview in order
to increase the data on Delta’s pre-merger HR function, but she refused, citing a lack of
time.
 71

4.2.2. Echo’s pre-integration HR function

In the early days, Echo’s HR function was decentralised with HR managers in the
various plants and units handling administrative tasks. At HQ there was at that time no
HR function. Two years before the merger, the top management team at Echo decided
to recruit an HR manager to work in the HQ, being in charge of HRD, and member of
the management team.

HR Echo: I was recruited to the HQ to the top management team, to focus on HRD. I was up
front given a strategic role, and that’s in fact the reason why I was employed. Previously, the HR
administration was scattered around the country.

One reason for doing so was reported to be the increasing number of HR issues being
raised in the top management. Prior to making that decision, the organisation had also
experienced a number of unsuccessful manager recruitments which had become very
expensive. Moreover, the organisation had grown, and due to the size it was possible to
allocate resources to more strategic HR activities as a complement to the administrative
HR must-haves.

HR Echo: The size of the organisation plays an important role. Where is the break even? You
always have to have someone taking care of administration, payroll, and industrial relations.
When the company grows you get the resources to have someone focusing solely on personnel
development. It all comes down to the size of the organisation and the mindset of the CEO.

The role of the HR function appears to have grown as a consequence of the new HR
manager joining the firm. Previously, the focus was reported to have been on
administrative tasks such as payroll, resourcing and industrial relations, which were
regarded as compulsory. The new HR manager added to the HR function an emphasis
on aspects he and the rest of the management team felt were of strategic importance,
namely resource management, competence management and reward management.

HR Echo: I had an HR team. Everyone worked with everything cause we are not that big that we
could have separate people to work with salaries or administration. My principle has been that
everybody shall have a good command of the whole HR field.

By recruiting a new HR director to the HQ, HRD was added to the formerly
administrative function. Within the plants business appears to have continued as usual,
while in the HQ an HRD position was filled and top managers started receiving support
when discussing e.g. competence and reward management.

HR DeltaEcho: The Finnish HR organisation [Echo] was good at its processes, but in a sense very
hierarchical and I’m not sure whether the programs they wanted to roll out were for the sake of
HR or for the good of the company.

The HR manager however had a clear vision, which united the interests of the
organisation and the employees. The explicit HR goal was expressed as follows:

HR Echo: We wanted to be the best employer.

4.2.3. Integration

The former CEO of Delta became CEO of the merged organisation, while the head of
HR came from Echo. The post-merger top management team of DeltaEcho initially
consisted of fifteen positions which were fairly equally divided between former Delta
and former Echo executives (8 Delta, 7 Echo). Within the first year of DeltaEcho’s
 72

history, a number of subsidiaries that were not considered to be part of the core
business were sold off, and along with them five positions in the top management team.
Hence, the management team decreased from 15 positions to 10. Later, the CEO was
retired and internally replaced by another member of the management group, and thus
the number of positions shrank to 9. Since then the number of positions has been stable
and the number of replaced members of the management group has been kept low.

The integration of the two firms was reported to have been highly structured, vary fast
and still carried out with a cautious hand. Some quick wins were made, as subunits that
were not part of the core business were sold off. The initial integration process was
allowed to last approximately 18 months. Then it was internally communicated that the
integration had reached its end and the new company was ready to focus on the
operational business. Larger rearrangements were made only a few years after the
signing.

HR Echo: The integration was highly structured, which may be the reason the merger succeeded
so well. There was a steering group and a number of subprojects, with the task to make sure the
synergies were safeguarded. Everything was documented and monitored. HR was included as
one subproject. Regarding HR there was not much synergy to gain, but in that process we started
working as an HR group with HR managers from all countries.

Cultural issues appear to have been an emerging theme in the integration. There were
not only two national cultures but more importantly two distinctly different corporate
cultures to be merged.

HR Echo: One often refers to the national cultures when talking about cross-border mergers,
Finns complain about Swedish bureaucrats and Swedes complain about Finnish management by
perkele29 and so forth, but in our case it was the corporate cultures that differed most between
Delta and Echo. The corporate cultures were of much greater importance than the national
cultures.

HR Echo: Delta was mentally a hillbilly, always second best, while Echo was a clear number one,
a market leader. It was an odd constellation as the Finns – that Swedes generally regard as
nobodies – in this case possessed the competence.

Apart from time limits and clear structures, the building of a new corporate identity
was central in the merger integration. As the pre-merger corporate cultures differed,
the core values of the post-merger organisation were a mix of the previous ones.

HR Echo: Before the merger quality was emphasised throughout the Echo organisation. Finance
was secondary, and good economics was believed to be a result of good quality. Today, in the
merged organisation focus has shifted towards delivering a good result.

29 Management by perkele is an expression for a Finnish leadership approach, according to which

decisions are made and action is taken quickly without much of discussion. This management style is often
contrasted to the consensus approach more common among Swedish managers, where the manager makes
sure everyone involved has been heard before any decision is made. The name – management by perkele –
is derived from the Finnish swearword perkele.
 73

4.2.4. Post-integration

The new HR function within DeltaEcho built on Echo’s pre-merger function and it
seems as if the post-merger HR role largely resembles the pre-merger HR role at Echo.

HR Echo: I started building up these structures [prior to the merger] perhaps it differed a bit
[compared to the post-merger organisation] because there is a constant learning process, but
these kinds of issues we dealt with.

The HR function was built as a process organisation, and divided into three core
processes. First, resource management included recruitment, succession planning and
job rotation. Second, competence management implied training, competence surveys
and development discussions. The third process, reward management handled issues
such as job and wage classification, wage and salary comparisons and statistics as well
as the design of bonus systems and other rewarding. The processes were supported by
four sub-functions namely: 1) personnel administration, 2) personnel services, 3)
networking and environment and 4) communication. (Source: Organisational chart
DeltaEcho)

The two interviewees described their every day work as follows:

HR Echo: We recruit people, we train them, pay their salaries. Our industry is extremely
complicated, it’s a tough line of business with strong unions so we have to be damn good at
personnel administration and industrial relations. And we need to have health care, canteens and
stuff. And as the unions are strong, having a strong network is important for us. Also, regionally
we are a large employer and therefore we need a strong external network, we want to be actively
involved in the unions and in the discussions regarding for instance trade exams and diplomas.

HR DeltaEcho: I have a team of eight persons, and we work with salaries, insurance and pension
schemes, administration and HRM. Within HRM our task is to support CEO and line in
structural matters and change processes and to create tools that support the managers in their
management. We also help out with salary revision, sickness leave, rehab, corporate health care,
company cars and other employee benefits.

The vision of Echo HR, to be the best employer, was also the vision of DeltaEcho’s HR
function. This implied for instance the supply of social services for employees.

HR Echo: Personnel services, in many organisations it’s part of the finance department, it is all
about office supply, switchboard, canteen and that kind of stuff, but we also have day care for
children, we are sort of exclusive in a sense.

Striving to be the best employer was a question of committing the employees to the
organisation. Communicating the linkage between strategy and reward was perceived
as a means to commit the employees to the business strategy.

HR Echo: We want the employees to understand the link between strategy and rewards, we want
them to see that these are strategic questions. Three times a year I arrange a DeltaEcho Business
Academy, for 65 managers, where we jointly build the strategy. By doing this, we want to create a
solid commitment.

Cost efficiency was emphasized in the post-merger organisation. To reduce costs, units
that were not perceived to be part of the core business were sold. Plants which were not
profitable enough were closed down. For the HR function it implied a lot of work on
cooperation negotiations.

The HR managers gave their reputational effectiveness a high rating.

 74

HR DeltaEcho: I feel I have obtained a strong trust for HR. Everything I initiate derives from a
true need, I don’t come up with things for the sake of HR, I only suggest things when I see a
problem we need to work with. In other organisations HR tends to be too fuzzy and lack business
orientation. In our organisation no-one at any level questions neither HR nor its value added. I
know my business, I identify the needs and I use my HR tools appropriately to strengthen the
business. My starting point is always to create success for the person I’m talking to. That’s why
people listen to me.

Although the message was that HR today is a strategic partner, further progress was
still called for. The HR function was reported to be fragmented in the sense that it still
dealt with a large variety of tasks instead of focusing on a few core activities.

HR Echo: Within HR we have not yet succeeded in defining strategic HRM and separate it from
operational HRM, which we ought to standardise and make more efficient, maybe even out
source. We still deal with a large variety of issues which makes the HR function seem fuzzy.

HR Echo: There’s still a lot to do in HRM, my god, HR is still very much in its baby shoes. HR’s
problem has been the lack of measurements and lack of clear objectives. And the work is
extremely fragmented, HR deals with everything from executive training till deciding on whether
they need a toilet in a certain plant or not. The work needs to be structured in order for the CEO
and line managers to grasp the whole picture, to take a position on the issues that they feel need
to be prioritised, because they do not have the time to look deeply into these things.

According to the respondents, the top management aspires to have an HR function with
a strategic input. The ambition is reported to be reflected in the inclusion of HR in the
management group.

HR Echo: It shows in the fact that there is an HR person in the top management team, which was
not the case a few years back. And it shows in the establishment of our solid competence
management system, which is initiated by HR, and which creates an explicit link between the
corporate strategy and the individual. And it shows in the bonus system planning.

4.2.5. Analysis of case DeltaEcho

Because of the lack of data regarding Delta’s pre merger HR role no analysis is made
about the role formulation and the factors that possibly influenced the role.

4.2.5.1. Echo pre-merger HR roles

The HR function at Echo had traditionally been administrative. The process engineer
role was hence the most central role. Industrial relations were likewise part of the
everyday HR business, fulfilling the negotiating lawyer role. HRD was emphasised on
top managerial level, and the HR manager fulfilled the strategy implementer role while
supporting and consulting managers and providing them the tools needed. Employee
advocacy was stressed in the goal formulation, as one wanted to become the best
employer.

HR Echo: Loyalty has disappeared; competence is today the key, young people choose
organisations that offer the best opportunities to quickly give them the competence they want.
That’s why we stress competence management.

The function lacked evidence of a business partner role.

 75

Strategic

Business Strategy
Partner Implementer

Proactive Reactive
Employee
Advocate Process
Engineer

Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 9 The roles of the Echo pre-merger HR function

4.2.5.2. Echo pre-merger influencing factors

Organisational level. Echo’s HR function seems to have been influenced mainly by

factors of the inner context. The reason for having a solid process engineer role is
derived from the company tradition, i.e. the administrative heritage. Administration
had for decades been the core activity, and continued to be so. The organisation had
grown during in recent years, which put higher demands on the HR function. As the
financial situation had meanwhile improved, the resources for the HR function had
likewise increased.

Individual level. Employee advocacy seems to have been a deliberate choice made by
the fairly new HR manager and top management team, as people were viewed as an
important and costly asset. Hence it seems to have been a question of attitude to focus
on employee advocacy. The strategy implementer role, which was introduced by the
newly recruited HR manager, was reported to be a consequence of CEO attitude and
size of the organisation.

HR Echo: It all comes down to the size of the organisation and the mind set of the CEO.

The growth of the company led to an increased budget for HR and also to an increased
need for top management to deal with HRM.
 76

Table 14 Factors influencing the roles of the Echo pre-merger HR function

The inner Organisational x Administrative heritage

context
x Financial situation
x Growth/Size of the organisation
Individual CEO/top management: x Attitude regarding HRM
HR professionals: x Competence
x Reputational effectiveness

4.2.5.3. DeltaEcho post-merger HR roles

The new HR function within DeltaEcho built on Echo’s pre-merger function, and thus
the same HR roles are identified. The process engineer role is perceived as a central
role. Also, the negotiating lawyer role seems to have been prioritised. Furthermore, the
employee advocate role is recognized. The official objective of the HR function was for
the organisation to be the most attractive workplace in the branch, where each and
every employee is given the opportunity to develop, use and share his/her competence
(Source: organisational information DeltaEcho). Accordingly DeltaEcho has been an
award winner in Finland’s best workplace contest.

There is no evidence for a pure strategic and proactive business partner role. On the
contrary, the HR function is reported to lack a strategic focus. As stated the head of HR:

HR Echo: We still deal with a large variety of issues which makes the HR function seem fuzzy.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive
Employee
Advocate Process
Engineer

Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 10 The roles of the DeltaEcho post-merger HR function

 77

4.2.5.4. DeltaEcho post-merger influencing factors

Outer context. The political and legal environment seems to have affected the role.
The HR function responded to the strong union by becoming involved in industrial
relations.

HR Echo: … And as the unions are strong, having a strong network is important for us. Also,
regionally we are a large employer and therefore we need a strong external network, we want to
be actively involved in the unions and in the discussions regarding for instance trade exams and
certificates.

Organisational level. On an organisational level, HR was affected by the

administrative heritage of Echo. Also, the business strategy steered the work as the
sales of certain business divisions led the HR function to work long hours on co-
operation negotiations/industrial relations.

Individual level. It seems as if the post merger HR role largely resembled the pre-
merger HR role at Echo. An important reason for this might be that the post-merger
head of HR at DeltaEcho was the previous head of HR at Echo. Also, he had joined the
organisation only two years prior to the merger and was still in the process of
constructing the HR function of Echo when the merger took place. Hence he appears to
have continued his work, business as usual, but in a merged and larger co-operation.
On an individual level, the competence of the HR manager influenced the role. Also, the
reputational effectiveness of HR professionals was regarded as good.

HR DeltaEcho: … In our organisation no-one at any level questions neither HR nor its value
added. I know my business, I identify the needs and I use my HR tools appropriately to
strengthen the business. My starting point is always to create success for the person I’m talking
to. That’s why people listen to me.

Merger context. The merger appears to have influenced both organisations involved.
From Echo’s point of view the role of the HR function did not change, while it
assumingly changed quite a bit from the viewpoint of Delta, as it is unlikely that the two
HR functions were identical to start with. However, Echo was also affected by the
influence of the other party as the importance of profitability was introduced as a
consequence of the new shared identity. A merger is furthermore believed to broaden
the knowledge base of the HR function.

HR DeltaEcho: You have one HR function consisting of ten people and another consisting of ten.
A merger makes it twenty. They do probably not possess exactly the same knowledge and
experience, instead the HR knowledge grows and the supply of the HR function thus becomes
broader.

Hence, the understanding of and the attitude towards the other party seem to have
affected the role of the post-merger HR function. The pre-merger HR functions had a
positive attitude towards learning from each other and developing the joint HR
function.
 78

Table 15 Factors influencing the role of the DeltaEcho post-merger HR function

The outer x Political and legal environment

context
The inner Organisational x Administrative heritage
context
x Business strategy
Individual HR x Competence
professionals:
x Reputational effectiveness
The merger x Understanding of and attitude towards the other organisation
context
 79

4.3. Foxtrot and Golf create Hotel

The description and analysis of the current case is based on data from three in-depth
interviews and eight post-merger annual reviews (Hotel) as well as two pre-merger
annual reviews, one from each merging organisation (Foxtrot and Golf). One of the
respondents was the current head of HR at Hotel and possessed a long history within
Foxtrot as line manager, but had held the position as head of HR only a couple of years
(hereinafter HR Hotel). The second respondent held the position as head of
administration at Foxtrot when the deal was announced, and became head of HR in the
post-merger organisation of Hotel (hereinafter administration Foxtrot). At the time of
the interview he had been moved to the position of head of administration reporting to
the head of HR. The third interviewee held the pre-merger position as head of HR at
Golf and had since the merger worked, first as HR specialist at HQ, and later as head of
HR of one of the business groups (HR Golf).

The deal between the two Finnish organisations Foxtrot and Golf was regarded as a
combination merger, and the CEO of the merged organisation referred to the merger as
the merging, restructuring and integration of two organisations to form a new company
(Hotel Annual report). The new organisation was soon given a new name: Hotel. The
name change was regarded as a token of the integration of two organisations.

Administration Foxtrot: As two equal partners merged, it was seen as an important symbol to
create a new company with a new name.

In terms of net sales and number of employees the two merging organisations were of
fairly equal size. Both corporations were active in the manufacturing industry, but the
areas of expertise within the two merging organisations were not seen to be
overlapping. On the contrary, the organisations were believed to complement each
other. As a result of the merger, Hotel became a global market leader in its particular
line of business.

The initial top management team of Hotel was established with representatives of the
both merged organisations. Over the years, the assembly was kept rather stable apart
from numerous changes of CEO as well as HR director.

The head of HR was never part of the core top management team, consisting of 6-8
members. However, HR was represented in the extended corporate HQ management
team of some 20 members.

Table 16 Milestones of the Hotel merger

Date Event
Day 1 Signing of the deal
24 months New CEO appointed as former retired
32 months Acquisition of third party
33 months New HRD position introduced
54 months New head of HR appointed, whereas former became
head of administration
62 months New CEO appointed
72 months New head of HR appointed as former resigned
 80

4.3.1. Foxtrot’s pre-integration HR function

Although Foxtrot was an international organisation, approximately two thirds of the

activities took place in Finland. Hence the organisation was regarded as a fairly
domestic player. The mind set was to centralise matters that could be centralised.
Regarding the HR function this implied that the HQ HR designed different policies and
procedures, which were then communicated to the HR managers within the different
business groups.

Administration Foxtrot: An important issue regarding HR at Foxtrot was that the CEO wanted to
develop Foxtrot as one sole entity with united policies, to the extent it was possible. If at HQ
there was an aspiration to do something, it would not be questioned in different countries or in
different business groups.

The different business groups had their own HR managers with whom the HQ HR
worked on the overall picture to create united HR policies and practices, but locally HR
managers independently supported their own business groups according to their
special needs. The most important tasks of the HR function were summarized in an HR
strategy, which emphasised the supporting of the success of the corporation as well as
the business groups.

Administration Foxtrot: Among the global HR function we had a fruitful co-operation due to
regular meetings. With a global group of less than ten people we prepared and tied people to
issues that HQ HR wanted to develop in a centralized way.

The HR function at HQ was small. It possessed two managerial positions, the head of
administration as well as the industrial relations manager. They were supported by
assistants. Together with their assistants the directors mainly worked on the
establishment of common tactical HR policies. The head of administration summarized
the key activities as follows:

Labour market issues were dealt with on HQ level; the employer image and general principles;
pay and reward principles and policies; cooperation structures among HR managers; as well as
management training and development. These were the predominant activities.

The HR function took care of the administration of management training and

development, whereas the training itself was provided by external consultants. Foxtrot
offered two training programs, one for senior managers and the other for younger
professionals with future potential. The programs were carried out by IMD30, which
was an important business partner for the HR function.

Administration Foxtrot: Naturally, we could not have had all the know-how to independently
provide such training.

Payroll was, in contrast to the overall policy, decentralised, which implied that each and
every business group handled the payroll in-house but separately with their own tools
and technology.

The relation to the CEO and top management group was perceived to be good,
including a well-functioning dialogue between the head of administration and the CEO.
The structure was informal as the HR function was not included in the management
team.

30IMD stands for International institute for Management Development, and is a global business school
located in Lausanne, Switzerland.
 81

Administration Foxtrot: I was not member of the executive team, but I reported to the CEO, and
in that respect I had a very independent role. We had very good and regular communication with
the CEO and he had clear visions and goals regarding what and how he wanted things.

4.3.2. Golf’s pre-integration HR function

Prior to the merger, Golf was a multinational organisation with manufacturing plants
in 10 countries. Only less than a third of its personnel worked in Finland. The
organisation was decentralised, consisting of four independent business groups. In
terms of HRM Golf was categorised by local responsiveness. At HQ there was
nevertheless an HR function.

HR Golf: Two of the business units had HR managers of their own, two of them had not. There
[in the latter ones] I handled everything between earth and sky, from managerial contracts to
layoffs and the entire administrative palette. In the other business units the HR managers took
care of the routine tasks and some training. At HQ HR dealt with resource planning and pension
schemes as well as climate surveys. Also, bonus and salary planning, trying to foresee the
inflation and manpower demand in the different countries, was part of our work. It was not very
dramatic, mostly it was administration.

Health care was part of the HR function, having an in-house doctor reporting to the HR
manager. In a global organisation the in-house doctor operated on a domestic level
only.

4.3.3. Integration

On the very same day that the combination merger plan was approved by the boards of
directors of Foxtrot and Golf, the head of administration at Foxtrot learned about the
deal. Although some weeks earlier the head of HR at Golf had heard from the CEO that
a deal was likely to take place, he did not demand a pre-merger effort from the HR
function. Hence, the two HR directors then started from scratch in designing a new
joint HR function.

Administration Foxtrot: The planning of the deal was carried out by a very small team, and HR
issues were not given much thought, there was only the will of the owners and top management
that the deal would go through.

The integration was reported to have been smooth. As the two merging organisations
had different business focus little overlap was expected. Apparent overlaps occurred at
HQ only.

A new HR organisation was created, including common politics and principles,

regarding the HQ HR. During the first six months, principles regarding management
development, compensation and benefits, co-operation within the global HR function
and EWC directives were thought through, prepared and acceptance was won for them.
The integration implied a lot of administration as new rules, regulations and policies
were needed with regards to several issues.

Administration Foxtrot: From day one we were equal peers [with HR Golf] and in co-operation
and mutual understanding had to find ways of doing and approaching things. Some four months
later I was appointed future head of HR, which helped things, as someone – in this case myself -
was then in charge of the planning and enforcement.
 82

It was Foxtrot’s former administrative director who became HR director at Hotel, while
Golf’s former HR director was given other HRM duties at Hotel. The latter was soon
reappointed HR director for one of the business groups.

In retrospect, the integration process was regarded as mainly positive. The merger was
perceived as the building of something new and bigger with even finer future prospects.

HR Golf: We are talking about two Finnish organisations, hell no, there is no problem there.

4.3.4. Post-integration

Hotel is the combination of two very different types of organisations. One of them was
predominantly a domestic firm and the other a global assembly of business groups.
Especially the fact that the one was used to operating internationally while the other
was perceived as very Finnish, was brought forth by the respondents.

HR Golf: they [Foxtrot] had a very centralised management culture, which led to extensive
discussions not to say small conflicts, when they tried to force the Foxtrot culture on us.

Administration Foxtrot: There were very different businesses, wherefore the question was, what
kind of cooperation will come out of this. What kind of management strategies will there be, and
which issues will be managed on HQ level, which on business level.

At HQ, half the HR team had to be made redundant, as HQ’s HR tasks did not double
even though the number of employees did. Hence, an HR team equal in size tothe HQ
HR team in either Foxtrot or Golf remained at Hotel HQ.

Administration Foxtrot: A first priority was to decide on the HQ HR role and the roles of the HR
teams within the different business groups. A decentralized model was decided on, where the
role of the HQ HR team was to provide top management with HR support and consultancy and
also to design common guidelines and tools regarding issues, such as compensation and
management development, in which united procedures were called for. Otherwise the HR teams
of the different business groups were very independent. The rationale behind the decision was
the high number of employees in other countries than Finland. Only a third of the personnel
were domestic. Through the years finding the balance between global standardisation and local
responsiveness has been a challenge for Hotel HQ, and the view on the best way to handle the
situation has altered at the same pace as the changes of CEO have taken place.

Finding the balance was not self evident as the cultures of the two firms differed with
regards to centralising or decentralising. Ultimately, deciding on what to do was rarely
perceived to be a problem; it was more difficult to decide on how to do things. In order
to create shared procedures that everyone would be willing to accept, they had to be
based on success stories. The suggested procedures needed to be good enough to be
worth implementing. To seek the best practice was the starting point.

Administration Foxtrot: We succeeded in finding practices that were good enough to be

centralised, we searched for these common efficient practices, using the best practice paradigm.

The post-merger HR function was reported to be mainly an administrative function.

The activities were divided into three approximately equally time consuming
categories, namely 1) compensation and benefits, 2) structural changes striving for a
more efficient and cost saving HR function; and 3) everything else, from recruiting and
development tasks to layoffs and redesigning pension schemes and health care.

HR Hotel: The HR function is a money-handling institution. A fourth of the company turnover is

basic salaries (1 of 4 billions). In addition to that bonuses are paid. A total of 1.25 billion goes to
 83

salaries, social benefits, bonuses etc. If the yearly profit is 300-400 million euro, a 10% salary
increase to all personnel will eat it up. That’s why we do not afford to make any mistakes when
designing pay schemes. The most important HR activity is pay and everything that has to do with
it. An organisation needs to be competitive in terms of salaries, but still has to be careful not to
pay too much.

Long-term HR planning appeared to receive increasing attention. The idea was to make
sure there were good successors for important positions, to identify potential, to train
and develop, and to keep elderly employees within the organisation rather than let
them retire.

Administration Foxtrot: An HR activity that recently has received increased attention is HR

planning including the identification of managerial potential, training and development and
successor planning. The aspiration is to systematize the procedures regarding goal setting and
performance appraisal.

In Hotel, a challenge for the HR function was post-merger to create efficient tools for
HRM to be used by line managers. The belief was that efficient tools would make sure
that line managers’ time would not be spent on HR administration but on effective
decision-making. In Hotel the designing of e.g. fair insurance policies was regarded as
complex and time-consuming. Also, regarding salary increases Hotel HR manager felt a
need for a tool that would easily show the line managers who in their teams are
under/over rewarded and the remedies for rectifying injustice.

HR Hotel: We spend too much time on routine HRM, which should be outsourced at a low cost.

4.3.5. Analysis of case Hotel

4.3.5.1. Foxtrot pre-merger HR roles

The Foxtrot HR function appears to have been traditional, with emphasis on

administration and industrial relations. Nothing indicates a business partner, a strategy
implementer or an employee advocate role. The process engineer role seems to have
been the most apparent, followed by the negotiating lawyer.
 84

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Negotiating Process

Advocate Lawyer Engineer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 11 The roles of the Foxtrot pre-merger HR function

4.3.5.2. Foxtrot pre-merger influencing factors

Organisational level. The role formulation appears to have been mainly influenced
by intra-organisational and individual factors. The number of blue collar workers was
high, which put certain demands on the HR function such as dealing with industrial
relations and everyday matters.

HR Hotel: If there are 600, you know, shop floor workers and there are constant strikes and
continuous brawls, from HR’s point of view there has to be a tough guy, telling them to stop the
hassle and get to work. It’s sort of a comrade-in-arms type of mentality.

The business strategy implied a centralised view, which affected the role of HR. The
administrative heritage seems to have affected the HR function to continue working
with administrative tasks. The fact that Foxtrot had had no HR manager, but instead
had an administrative manager suggests a conservative heritage.

Individual level. On the individual level, the skills and the personal preference of the
administrative manager might have affected the role played.

Table 17 Factors influencing the roles of the Foxtrot pre-merger HR function

The inner Organisational x Administrative heritage

context
x Type of workforce (blue/white collar)
Individual HR x Competence
professionals:
 85

4.3.5.3. Golf pre-merger HR roles

The Golf pre-merger HR function was administrative.

HR Golf: It was not very dramatic, mostly it was administration.

Filling the process engineer role, the HR function focused on the balancing act between
being local responsiveness and global standardisation, mostly deciding on the previous,
which indeed led to unstandardised processes and apparently more administration.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Advocate Process
Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 12 The roles of the Golf pre-merger HR function

4.3.5.4. Golf pre-merger influencing factors

Organisational level. The HR function appears to have been affected mainly by

organisational issues. The business strategy, which suggested that local responsiveness
should be adopted, was at least partly a consequence of the organisation being global.
Prior to the merger, the HR function did not seem to be subject to any major changes or
development. The administrative heritage is argued to have been an influencing factor.

Individual level. The HR manager’s preference for keeping it simple is reflected in

the quote below.

HR Golf: It [the HR function] has a tendency of becoming a Christmas tree instead of being an
ordinary tree. During recessions, the number of irrelevant tasks tend to drop; unfortunately very
important activities also disappear sometimes, but that is something you have to accept.
 86

Table 18 Factors influencing the roles of the Golf pre-merger HR function

The inner Organisational x Administrative heritage

context
x Business strategy
x Degree of internationalisation
Individual HR professionals: x Competence

4.3.5.5. Hotel post-merger HR roles

The post-merger HR function within Hotel appears to be more diverse than its two
precursors. The process engineer role still seems to be the most central one.

HR Hotel: In our company 75-80 per cent of the HR crew is occupied with basic HR tasks. We
want to put more emphasis on activities that support the business. I would be extremely pleased
if there was a 50-50 division between administration and business support. That would be
excellent.

Trying to shift focus implied restructuring of processes, which by definition indicated

that the process engineer role became focal. Efficient tools needed to be created and
procedures had to be standardized. At present, there seems to be scarce signs of a
strategy implementer role, although it is evident that the HR manager is striving
towards that particular role. The negotiating lawyer role is recognised.

HR Hotel: Another time consuming issue is all our interest groups, of course we have the trade
union movement, discussions and cooperation between the trade unions and the employers’
organisation. It takes some of our time.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Negotiating Process

Advocate Lawyer Engineer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 13 The roles of the Hotel post-merger HR function

 87

4.3.5.6. Hotel post-merger influencing factors

Organisational level. The organisational aspects that might have affected the HR
role formulation in Hotel included the degree of internationalisation.

Both Foxtrot and Golf had small HR teams at HQ level, and that has remained constant
at Hotel. A key HR issue at Hotel was the question about local responsiveness vs. global
integration. As did Golf, Hotel also constantly sought the right balance between local
responsiveness and global integration. The former head of administration at Foxtrot is
aware of the differences in the role of the HR function between Foxtrot and Hotel. As
Foxtrot was a smaller organisation with fewer international operations, the work of HQ
HR was also more hands-on. Hotel consisted of a number of rather independent
business groups, which led to HQ HR having an intermediate managerial role. The true
HR work is taking place with and through the help of the HR managers of the different
business groups.

It appears as if the discussion regarding whether the HR function needs to centralise or

decentralise was a consequence of the organisation being a global operator. The choice
to opt for decentralisation seems to have been influenced by the HR manager, who was
concerned about differences in labour law cross the countries. My perception is that the
HR manager, who held a degree in law, prioritised the legal aspects.

HR Golf: From time to time we [the HR function] got these bizarre proposals from top
management to streamline managerial contracts they wanted some general principles. There is
no such thing, the title might be the same but the redundancy regulations for example differ from
country to country. It’s hopeless, it’s time badly spent, we [the HR function] have better things to
do. Then they [top management] wanted some united incentive plans, they wanted to introduce
policies that were unethical. Legally it might have been ok in Finland but definitely illegal in
Germany, France, England and Italy. We would have ended up in court.

After the merger between Foxtrot and Golf, a third equally large organisation was
acquired, and thus Hotel grew by a third. The acquisition might have had a positive
impact on the creation of a joint corporate culture, since the Hotel people who
previously would have regarded themselves as either Foxtrot or Golf people, now
regarded themselves as a Hotel team working on the take-over of the third party. Post-
merger and post-acquisition a new corporate culture has been established in Hotel,
which implies that the prevailing corporate culture is young. The numerous changes of
CEO and HR manager reinforce the young corporate culture and reduce the restricting
effect of administrative heritage.

As in Foxtrot, the type of workforce was predominantly blue-collar, which according to

the HR manager demanded a readiness to refute strikes and brawls.

Individual level. Numerous changes of CEO led to continuous discussions about

finding the right balance regarding international management for the organisation. The
attitude of the CEO affected the whole organisation.

Administration Foxtrot: In retrospect, an area in which we have struggled, is in finding the

balance between the tasks of HQ and business units, what position does each unit hold at each
time. During our short history there have been some changes, depending on the personality of
the CEO, depending on who has been in charge, so far the viewpoints have varied.

Apart from having an effect on the organisation as a whole, the CEO’s attitude
regarding HRM impacted the HR function in particular.
 88

HR Hotel: Our current CEO has a true interest in the HR function and also puts a lot of pressure
on HR.

The HR function furthermore appears to have been influenced by the expertise

possessed by the HR professionals. At the time of the merger, the HR manager was an
administrator. Two and a half years after the signing, a new HRD position was
announced to become an equal peer to the HR director position, likewise reporting to
the CEO. After another two years, the HR manager was moved to administration while
a new HR manager was recruited externally. He possessed vast experience in HRD.
Another 18 months later, a new HR manager was appointed, this time someone
possessing limited experience in HRM and vast experience in line management. The
current HR manager, who held a PhD in technology, was concerned about the
inefficient HR processes and high costs of the HR function. Her ambition was to release
time and money by outsourcing basic activities.

The merger context. The change in organisational structure that followed the
merger appeared to have influenced the HR function. The respondents reckoned that
the integration of two entities into one will imply change for the HR function.

Administration Foxtrot: Both organisations are likely to have the same functions and it is very
unlikely that the new entity would need double functions.

The statement focuses on the overlap which took place at HQ when Foxtrot and Golf
merged, and is an example of a change that would not have occurred without the
merger. The reformulation of the HR function was regarded as only partly influenced
by the merger, and the perception was that in any case there was a slow but constant
reformulation of the HR function.

Administration Foxtrot: The merger is a window of opportunity. You have to rethink many
things, procedures which at the same time can be improved. Instead of choosing one of the two
existing ways of doing things you might come up with a third and better way. In the merger
process, you have three options: either you chose one of the two existing procedures or then you
chose a new one. The merger renders change possible that would perhaps otherwise not be
possible in a short time span.

As reported above, Hotel HR function sought the best practice. Hence, the
understanding of the other party gained by the organisation because of the merger
seems to have been an improving factor, although a rather modest one.

Administration Foxtrot: But wonders are unlikely to happen. Within the HR field, true
innovations which would save lots of time are rare, hence to opt for a new procedure is unlikely
to have a tremendous impact and imply substantial change.

Table 19 Factors influencing the roles of the Hotel post-merger HR function

The inner Organisational

x Degree of internationalisation
context x Type of workforce (blue/white collar)
Individual CEO/top management: x Attitude regarding HRM
HR professionals: x Competence
The merger x Changes in organisational structure
context x Understanding of the other organisation
 89

4.4. India and Juliet merge to create India-Juliet

The description and analysis of this case is based on data from three in-depth
interviews and eight annual reports dating from one year before the merger (India and
Juliet) until six years after (India-Juliet). One of the respondents was a top
management representative, working at India-Juliet HQ as the chief financial officer
(CFO), and prior to the deal had been CFO of Juliet (hereinafter CFO Juliet). Prior to
the deal the second respondent was HR manager at Juliet and at the time of the
interview he held the position as head of HR in one of the business units (HR Juliet).
Prior to the deal the third respondent had been employed as industrial relations
manager at India and was post-merger in charge of HRM in another business unit (HR
India). At India-Juliet HQ there was no actual HR function.

The outline of the description and analysis of the India-Juliet case differs from the
others, as it not only presents two pre-merger organisations, but also two post-merger
organisations. This is a consequence of the demerger that took place after the two
organisations had been integrated.

The merger agreement of India and Juliet stipulated that the companies would merge
as equal partners. Both parties were Finnish domestic organisations active in the
service industry. As a consequence of the merger, the organisation became a service
group providing the most comprehensive range of products and services in its sector.
The attempt was to incorporate the operations of the two organisations. (annual
reviews)

Table 20 Milestones of the India-Juliet merger

Date Event
Day 1 Signing of the deal
Integration
15 months Acquisition of third party
15 months New CEO appointed as former retired – heavy
restructurings whereby organisation split into
different business units (de-merger)
27 months Acquisition of fourth party, which was
incorporated into one business unit

4.4.1. India’s pre-integration HR function

The HR organisation of the former India was a matrix comprising different groups of
HR services, which were supported by a number of HR processes. At HQ there were
three HR managerial positions: the HR manager, who was responsible for the steering
processes; the industrial relations manager; and an HRD manager. They had a crew of
people working with HR production, HR reporting, salary administration and payroll,
recruitment, employment relations and employee safety.

HR India: The HR director was in charge of the strategic processes, I was responsible for
industrial relations and my colleague was responsible for HRD, and then we had something of a
[HR] factory.
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4.4.2. Juliet’s pre-integration HR function

At Juliet, the HR function had for some years prior to the merger focused on industrial
relations, since thousands of people had been dismissed due to restructurings, and co-
operation negotiations31 had been the single most time-consuming activity. Most of
HR’s resources were allocated to labour market related activities.

HR Juliet: The role of the HR function was very important, as the number of employees was
reduced by 7000.

Other HR activities that were on the agenda were the administration of different
matters such as payroll, working hours and holidays; training and development; as well
as employee safety and wellbeing. Due to the prevailing economic situation of the
organisation there was no recruitment activity. The top management was pleased with
the work done by the HR function.

CFO Juliet: The HR function worked well in Juliet. There had been extensive layoffs within the
organisation both due to rationalisation and to the economic crisis in order to achieve better
profits. HR handled that very well. HR was rarely needed for recruitment issues, it was all about
letting people go. The management co-operated closely with the HR function due to the
everlasting layoffs.

4.4.3. Integration

The perceptions regarding the pre-merger involvement of the HR function appear to be

somewhat ambiguous. On the one hand the HR respondents stated the importance of
HRM in any merger and argued for the vitality of an HR due diligence.

HR India: HR is naturally part of the highly confidential due diligence process, since the
personnel is during a merger transferred to the new organisations as if they were old employees
and one needs to know their benefits and salaries. One needs to know what kind of people there
are, how expensive they are, and what the minimal conditions the acquiring company needs to
fulfil are. Obviously one has to plan a negotiation process which is in accordance with the act on
co-operation.

On the other hand, there seems to be no evidence of HR actually taking part in the
India-Juliet pre-merger planning. The third respondent, the CFO who himself was
responsible for the pre-merger negotiations, did not remember HR participation.

CFO Juliet: I was involved in the planning from day one, in a team of four to five persons. To
start with, HR was not part of that group, actually I think HR joined us when the deal had
already been announced. The group needs to be as small as possible, and there was no need to
include HR. They probably joined at the very end of the planning process.

HR India: I knew that the executive management team was considering a merger, I knew that
India strived to make an acquisition and I knew that the target company was Juliet. And the very
same day the deal took place I was invited to an informative meeting.

31Co-operation negotiations refer to the process in which a corporation negotiates with the trade union
regarding e.g. layoffs. The duty to negotiate is envisaged in the 1978 Co-operation Act. Negotiations are
compulsory in matters covered by the co-operation procedure and have to be undertaken with those who
will be affected before any decision is taken. In case the employer's proposed measure entails the dismissal,
transfer to part-time or layoff for more than 90 days of at least 10 employees the duty to negotiate is not
fulfilled until the negotiations have lasted six weeks. (source: http://www.eurofound.europa.eu/emire/
FINLAND/ANCHOR-YHTEISTOIMINTANEUVOTTELUTSAMARBETSF-Ouml-RHANDLINGAR-FI.htm)
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Regardless of whether the HR managers were present in the pre-merger negotiations,

HR issues were nonetheless discussed; at least benefit and retirement schemes were
screened.

CFO Juliet: The collective agreements and that stuff were screened prior to the deal. My God
what kind of benefits they had at India, there was a pretty thick layer on the sandwich so to
speak.

To begin the integration, a number of merger working groups were established,

consisting of people from both parties. An HR working group started working on the
incorporation of the two HR functions. Neither of the HR managers had to leave the
organisation; instead they worked together on integration, streamlining among other
things the employment contracts, collective agreements, salaries and benefits. In this
change process HR had a vital role.

CFO Juliet: In the change process they [the HR function] play a central role, they have to be
involved, otherwise it will be a complete mess. But the change process starts only when the deal
has been signed.

HR India: HR has a planning role, a process role, managerial education, and in a sense also a
monitoring role, as HR follows up how the work goes. We receive instant feedback from
employee organisations, we have continuous negotiating procedures, discussions with our
employee organisations, they tell us which aspects we need to improve. It’s a useful forum.

Integration appears to have been affected by a cultural clash that emerged between
India and Juliet. India was an old, stable organisation while Juliet had only just gone
through important restructurings due to an economic crisis. Also, the perceptions held
by both parties regarding the other party appeared to be anything but flattering.

CFO Juliet: According to them [India people], Juliet resembled a sluggish state-owned
cooperation, without any dynamic, whereas we perceived them as dusty old people who have
never seen anything change.

One issue in particular raised by the respondents from Juliet was the difference in
experience concerning co-operation negotiations. Juliet possessed vast experience in
rationalisation and downsizing, which India lacked.

HR Juliet: I think India’s HR function was crappy. I was the only one who had mastered
contracts law.

CFO Juliet: A huge difference between the HR functions at former India and Juliet was that
former India HR function had never carried out any bigger layoffs – that was a complete cultural
difference. The feeling of entering India was as if we had gone back ten years in time, as things
were in Juliet before all layoffs. At India no-one had thought about which functions that needed
to be in-house and which functions that could preferably be out-sourced. Everything was
produced in-house.

The respondents did not perceive the merger as equal. India was legally and financially
the acquirer and regardless of any statements made by top management according to
which it was a merger of equals, India seems to have taken the lead in the integration
process.

CFO Juliet: It was a take over made by India. In the press we used the nice term merger of
equals, but in reality I have never seen such a thing.

HR Juliet: There’s no such thing as an equal merger. The India HR manager made all the
decisions, while we [Juliet’s HR professionals] were in the position of fosterlings.
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HR India: The integration of India and Juliet was a mistake made by India’s top management.
There were no synergies to be gained.

CFO Juliet: India took the lead, trying to force the India way on the whole organisation. The
Juliet people perceived India’s over-all organisation as rotten. Fortunately our new CEO was
soon appointed and he made the organisation more focused, more like the old Juliet
organisation.

4.4.4. Post-integration and demerger

The integration of India and Juliet was hardly complete when the new CEO was
appointed, and a new round of important restructurings was introduced. It was decided
that India and Juliet would form two separate business units and that a third recently
acquired party would be incorporated with Juliet. One year later a fourth organisation
was acquired, and integrated with India. The organisation became a business group
lacking an HR function at HQ.

During the first year of the merger, the merged HR function had streamlined the
employment and collective agreements of the merging firms. As a third organisation
was acquired only 15 months after the initial India-Juliet merger, the number of
different types of contracts within the organisation was large.

HR Juliet: When the work was finished India and Juliet were demerged

At the time of the interviews India and Juliet had been separated from each other.
Although they still belonged to the same business group with a few common issues,
their operations were kept separate. Hence, there was not one united HR function, but
two separate HR organisations. These two HR organisations were also influenced in
different ways by the two separate acquisitions that had been made after the initial
merger.

4.4.5. Post-demerger India

The HR organisation of post-merger India was still a matrix organisation constituting

of four groups, i.e a salary team; a consultancy team; employment relations; and health
care services. These were supported by six processes: a steering process; a production,
reporting and technical process; a recruitment process; a co-operation and negotiation
process; an advising process; and an occupational safety and welfare process.

HR India: Within our HR function we have an administrative function which is in charge of the
payroll, our administrative IT tool and HR reporting, then we have a team of client relationship
officers supporting line in their HRM. Our legal counsel and I are responsible for industrial
relations, co-operation negotiations and so forth. And last we have a couple of people working
with safety and wellbeing, health care.

The post-merger HR function was hence very similar to the pre-merger function. An
important difference was however the size of the function, as one had been forced to
make the function more cost efficient. The single most important reason for letting
people go was the outsourcing of health care. Also, HRD was restructured in such a
manner that less HRD personnel was needed.

HR India: When the demerger took place, I had an HR staff of 49 persons, now we’re down to
less than 20.
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The task of the HR function was believed to be to make sure the personnel was
competent, well motivated and possessed high potential. Good training and
development procedures, reward schemes, recruitment processes, compensation and
benefits, and wellbeing processes were believed to enhance the interest of skilled people
in the organisation.

HR India: We have to create the setting for smart people to be interested in our organisation; the
value-added comes from the expertise and attitude of our employees. That’s our vision.

The HR supply furthermore needed to be cost efficient and of high quality. It also had
to free time for line managers to focus on their own business and aid those in the front
row to cope with their duties.

4.4.6. Post-demerger Juliet

Within post-merger Juliet the two most central HR activities were human resource
planning and employment relationships. The first one included recruitment and
development, while the latter included everything from health care to compensation,
not to forget industrial relations.

The HR function employed approximately 30 people. A third were occupied with the
payroll, another third was divided between health care and HRD, while the last third
were employed to handle industrial relations, employee safety, recruitment, reporting
and ad hoc administration.

CFO Juliet: Line managers ask HR for help regarding compensation, recruitments and helath
care issues.

A challenge for the HR function was to improve the image of the organisation.
Otherwise, the risk was the best young professionals would not be interested in working
for Juliet.

CFO Juliet: According to a recent survey Juliet’s employer image is lousy. Young talents prefer
other industries.

4.4.7. Analysis of case India-Juliet

The HR functions of India and Juliet were analysed before the merger and after the
demerger. It seems as if very little change occurred within the two separate HR
functions, and that the roles that were indentified before the merger were identical to
those identified after the demerger. Hence, the analyses of the pre- and post-
merger/demerger settings are presented at the same time.

4.4.7.1. India pre-merger and post-demerger HR roles

Neither India’s pre-merger nor post-demerger HR function had any signs of a business
partner role. Neither was an employee advocacy role identified. There was a vision to be
an attractive employer, but the tools to obtain that status seemed to be mainly
administrative. Speaking of which, the process engineer role appeared central.
Managing the payroll, employee safety, record keeping etc enhanced that particular
role, both before the merger and after the demerger. Another critical role was that of
the negotiating lawyer. The strategy implementer appears to have been included in the
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core HR activities as consulting line managers and providing them with efficient tools
for HRM were prioritised.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Negotiating Process

Advocate Lawyer Engineer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 14 The roles of the India pre-merger and post-demerger HR function

4.4.7.2. India pre-merger and post-demerger influencing factors

The merger context. In combination with the restructurings that led to the
demerger, India’s organisation was analysed and restructured.

HR India: We X-rayed our organisation and I participated in that change process. An external
consultant directed the project. As a consequence, we started a huge co-operation negotiation
process which resulted in a layoff concerning 300 employees.

It appears to me that the reason for the restructurings within India was the
appointment of the new CEO. The need to change as argued by the respondent, had
probably been there for a while, but it appears to me as if the new CEO discovered the
need and made sure appropriate changes were made.

CFO Juliet: … fortunately our new CEO was soon appointed and he changed the organisation to
be more focused.

The organisational level. Despite the fact that India gained an understanding of
Juliet’s HR function and incorporated for instance pay and employment contracts, the
structure of India’s HR function was not touched. Hence, it seems to me that the
traditions within India, the way people were used to doing things, i.e. the
administrative heritage, steered the role to a large extent. The financial situation of the
organisation appears to have had an impact as the restructurings that took place in
combination with the demerger aimed at cost-cutting.
 95

The new CEO of India-Juliet Group strongly supported shareholder value. Nothing
appeared to be sacred; everything had a price. Hence on an organisational level, the
business strategy influenced the HR function, at least in terms of the number of
employees.

CFO Juliet: We are ready to change structures, do what ever it takes, to improve share holder
value. Our mission is to make money.

The individual level. On an individual level, the CEO appears to have influenced the
HR function. He clarified the structures of the organisation and demanded cost
efficiency. Nevertheless, he did not appear to have any particular stance on HRM, but
rather on structures and efficiency on a general level. Hence, no change in HR’s role
was identified. The India HR function continued to be mainly administrative, although
more cost efficient.

While interviewing the CFO it seemed that top management had not given the HR
function much thought, that no-one had questioned the services provided by HR or
how they could be improved. Management let HR live its own life as long as it was not
too expensive. I presented my thought to the interviewee, who confirmed my
suspicions.

CFO Juliet: Yes, that’s how it is, I believe you are right, yes you are right.

Table 21 Factors influencing the roles of the India HR function

The inner Organisational x Administrative heritage

context x Business strategy
x Financial situation
Individual CEO/top management: x Attitude
HR professionals: x Competence
The merger x Changes in organisational structure
context

4.4.7.3. Juliet pre-merger and post-demerger HR roles

Juliet’s HR function resembled India’s in the sense that the process engineer and
negotiating lawyer roles were perceived as the most central ones. Also, Juliet lacked an
employee advocate role. There was, however, an important difference between India’s
and Juliet’s HR functions, which regarded culture. Extensive layoffs within pre-merger
Juliet had forced the HR function to become cost efficient and in a way the whole
function became very central to the entire organisation. It appears to me that there is
no actual evidence of HR playing a business partner role, as in many respects HR was
merely an administrator. Regarding the negotiating lawyer role, the HR function
appears however to have taken on the dirty work that was essential for the survival of
the organisation. Hence, the business strategy is believed to have been embedded in the
co-operation negotiations, which the HR function managed successfully.

The roles clearly identified are thus the process engineer and the negotiating lawyer,
while the strategy implementer is partly identified. It appears as if major changes had
taken place within the HR function prior to the merger because of the economically
difficult times, and that the post-demerger role of the HR function did not differ
 96

substantially from the pre-merger role. Hence, the figure presented below illustrates
the HR function as it was both pre- and post-merger.

Strategic

Business
Partner Strategy
Implementer

Negotiating
Proactive Lawyer
Reactive

Process
Employee Engineer
Advocate

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 15 The roles of the Juliet pre-merger and post-merger HR function

4.4.7.4. Juliet pre-merger and post-demerger influencing factors

The outer context. The economic cycle had had an important impact on pre-merger
Juliet, as there had been a crisis in that particular industry, which forced the
organisation to let hundreds of people go. In the post-merger HR function cost-
efficiency remained a high priority because the business objective was to increase
profitability.

The inner context. As the post-merger HR functions of both India and Juliet
belonged to the same group (India Juliet Group) the HR functions were under the
influence of the same organisational factors. Moreover, Juliet’s HR function was
affected by the CEO’s attitude in the same way as was India’s HR function.

The differences in the roles mainly appear to have been a consequence of differences in
the traditions of the HR functions and the expertise and competence of the different
HR professionals. The education of Juliet’s HR manager, who was a lawyer, perhaps
made him sensitive to labour law.
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Table 22 Factors influencing the roles of the Juliet HR function

The outer context x Economic cycle

The inner context Organisational x Administrative heritage
x Business strategy
x Financial situation
Individual CEO/top management: x Attitude
HR professionals: x Competence

The fact that the changes that occurred in the two HR functions discussed in this
chapter were minor, might suggest a tendency of favouring the old and known, that the
administrative heritage is of uttermost importance.

HR Juliet: In a merger, the best practices should be chosen as the common ones. However, this is
far from reality as few people are ready to let go of old routines in favour for something new. It’s
difficult to see the upside with new routines when the old ones have worked just fine for years.

In line with this argument India’s HR manager noted that the changes that had taken
place within India’s HR function was a consequence of the merger as the restructurings
were forced on the old organisation.
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4.5. Kilo and Lima merge to create KiloLima

The description and analysis of the current case is based on data from three in-depth
interviews and 8 annual reports dating from one year before the merger (Kilo) until
seven years after (KiloLima). One of the respondents represented the top management
team. Prior to the merger he was head of one of the business divisions of Kilo, and post-
merger he continued on a top managerial position (hereinafter management Kilo).The
second respondent was working within HR in Kilo as head of HR of one of the business
divisions before the merger took place. After the merger she became head of HRD at
KiloLima HQ (HR Kilo). The third respondent had been working within the Lima
possessing experience as both HR professional and line manager. After the merger she
continued as HR specialist within KiloLima HR centre (HR Lima).

The Finnish Kilo and the Swedish Lima merged to form KiloLima Corporation. The
merger enhanced the group’s international competitive edge in selected sectors in
northern and continental Europe. The organisation is today a leading European service
provider within its sector (annual reviews).

HR Kilo: Pekka and Sven [the former Kilo and Lima CEOs] had become the best of friends
during their years in the business, and had for years been discussing a possible merger. They put
forward the deal as the perfect match, a merger of equals and stated that they, the future CEO
and deputy CEO of KiloLima were best friends.

The division of managers in KiloLima’s top management group was 70/30 in favour of
Kilo. Kilo’s former CEO became CEO of the merged organisation, while Lima’s HR
director was appointed head of HR. The assembly of the management group remained
quite stable over the years after the merger. Some four years after the merger the group
grew from a ten-people-team to consist of some fifteen members. Later the CEO was
exchanged due to retirement. The head of HR has remained the same since the deal was
launched. (annual reports)

According to the annual review from the year of the merger, HR aspects were given
high priority in the merger process, because the operations were regarded to rely
entirely on the innovation and expertise of the personnel. Hence, the treatment of
employees was believed to be essential in order for them to feel confident and
motivated to work towards common goals.

Table 23 Milestones of the KiloLima merger

Date Event
Day 1 Kilo and Lima combined to form KiloLima
Growth in terms of number of employees as well as net
sales and operating profit
48 months Integration and standardisation process up and
running throughout the organisation

4.5.1. Kilo’s pre-integration HR function

The main activities the HR function catered for prior to the merger were: 1) industrial
relations; 2) competence development; and 3) administration.

HR Kilo: The HR function within the former Kilo was very administrative. It encompassed a
strong management development function, which however was rather administrative; it was
 99

more about education than development. Furthermore HR implied a lot of basic administration,
HR administration.

At Kilo group level HR was represented by two HR professionals, one of which was
member of the management group.

HR Kilo: One of them was head of administration, he was really administrative, but he was still a
member of the management group. The other one [HR executive] admittedly understood much
of HRD, because he was in charge of the management development, the executive education, but
he lacked the right personality to run a change process. His interest lay within industrial
relations and he worked a lot with the union and those kinds of things that were very close to his
heart.

The industrial relations received vast attention. The business was very domestic at the
time, and thus, the Finnish legislation was focal. The fact that Kilo CEO was vice
chairman of the employers’ confederation of service industries indicates the perceived
importance of industrial relations also within the management group. The size of the
organisation and the industry within which it was operating implied that there were
thousands of employees who were organized in a trade union, and who obeyed a
collective agreement.

Management Kilo: Back then the mind set and set up of HR was completely different from today.
In recent years we have reached a much more international level in that respect. Although the
organisation had already grown rapidly before the merger, the HR function was still focused on
aspects of the old closed economy including industrial relations. When the organisation grew, the
Kilo HR function did not follow.

4.5.2. Lima’s pre-integration HR function

Although the role of the HR function in Lima was likewise rather administrative, the
Kilo and Lima cases still were very different. At Lima, line managers took the main
responsibility for HRM. There were large investments in recruitment and
compensation schemes, but none of them was handled by the HR function. The role of
the HR function remained quite administrative, while the more strategically important
parts of HRM were handled by line management.

One important reason for line managers’ involvement in HRM was the company
structure. Lima was divided into a number of small companies employing 50-100
employees each, with an equally high number of CEOs. These companies often lacked
an HR director.

HR Lima: The sub-organisations were deliberately kept small enough so that the managers could
handle everything themselves. The philosophy was that the lack of an HR function will force the
manager to take responsibility for the personnel and to truly get to know the employees and their
needs.

Also, the HRM was regarded to be straightforward and hence the need for HR
specialists quite small. The view was perceived to be a consequence of the economic
boom, as cost-cutting was not on the agenda. One of the main HRM concerns was
attracting and retaining right people and how to be a good employer. Lima could afford
to pay good salaries and offered various social events to tie the employees to the
organisation. For instance, the introductory training took place at sunny holiday resorts
such as Mallorca or Crete.

HR Lima: The employees were mainly highly educated and there was a lot of money to pay them,
so HRM was not very complicated. The line managers creatively designed different bonus and
 100

benefit programs, everything from free cars to courses and holidays. And some of that is still left
because it’s so difficult to get rid of.

Regarding HRM, the degree of cooperation across the divisions was low. At HQ there
was a small administrative HR department. One year prior to the merger there had
been a shift of HR director. The newly appointed director had extensive experience in
HRD, and aimed at developing that part of the HR function. At the time of the merger,
however, it was still in its early stages.

HR Lima: The HR function was a traditional personnel function, taking care of the writing of
employment contracts, distributing keys and cakes and everything, nothing strategic.

Prior to the merger, the newly appointed HR director got involved in the pre-merger
planning. One of his tasks was to prepare pre-written answers to all the merger-related
questions the personnel would probably be asked. The fact that he was invited to the
insider group, which was preparing the merger-to-be, was regarded as a token of trust
and belief in his competence.

4.5.3. Integration

The merger was announced as a merger of equals. The message communicated to the
personnel was that the intention of the merger was organisational growth and to
broaden the competence and service supply, as the merging organisations focused on
different business segments. Consequently no jobs were about to be lost as synergies
were not a top priority.

HR Kilo: To call it a merger of equals was interestingly enough a qualified truth, since Kilo
became the dominant party. Kilo was more profitable than Lima, and also Lima was heading
towards the same strategies that had already been implemented in Finland. Furthermore, the
management group became rather Finnish as the managers with the best track records in terms
of profitability came from Finland.

When the deal had taken place, not much was done to integrate the companies. The
philosophy was to let the ‘flowers blossom’, to have separate cultures under the same
roof. The immediate measures concerned management development and strategy
building and were driven by the HR function.

Management Kilo: Straight after the merger we realized we needed a next generation
management development program, which was strongly led by HR. The 200 most senior
managers were sent to various trainings. This has formed the base for the building and
development of our current business strategy. In this sense the HR function has been a true
change manager.

Already before the signing of the deal, Lima HR manager had become involved in the
merger process. Also, during the integration process his input appears to have been
focal.

HR Kilo: The merger between Kilo and Lima was completely driven by Lars [head of HR at Lima]
in particular the integration, for which he became chief responsible, but also the pre-planning
including due diligence and so forth; he also had a very heavy position in those.

Management Kilo: To the best of my understanding Lars [HR director at Lima] was part of the
Swedish insider group. In that respect HR had a strong representation. The Finnish insider
group did however not include HR.
 101

Only a number of years later, the organisations were systematically integrated into one
and another. And at the same time the HR function was restructured.

4.5.4. Post-integration

Based on the interviews, it appears as if the six main activities the HR function has
been involved with since the merger are 1) competence development, 2) compensation,
3) administration, 4) industrial relations, 5) integration, and 6) organisational
structure.

HR Kilo: Prior to the changes there were some 80 different HR systems. At the same time as the
finance administration was centralised into a support system, the HR administration was
centralized as well using the same supplier.

As the standardisation and integration took place, the head of HR started building an
HR strategy. The idea was to have a support function on the administrative side, and
also an HR professional within each and every business division who would be member
of the management group of that division. The support function, which was called the
‘HR centre’, was to provide service regarding everything standardised within HR. It is
partly administration, and partly common processes as for instance guidelines for
conducting M&As.

HR Lima: The HR centre is not a consultancy unit, it delivers; it is a manufacturer, a supplier.

They do what they are asked to do in a centralised way. They write employment contracts, handle
the record keeping, the payroll. They work as a pure production unit.

The HR administration was thus largely standardised with the help of an IT system.
The structure set free some of the HR professionals’ resources, which were reorganised
to focus on business support.

HR Kilo: When the merger had taken place, we [the organisation] first continued to work in a
decentralised way. But regarding HR we [HR executives] soon realized the potential of
standardizing and we have worked hard on that. Especially on issues such as competence
development and management development we have worked quite organised and in a KiloLima
way.

Management Kilo: 20% of the time of the management group is spent on HR issues. That’s quite
a lot, but it is definitely needed. We discuss rotation issues, new HR projects etc. The HR
function has succeeded in gaining a more important role by having an HR director of large
calibre who possesses certain credibility and is listened to.

Since the merger, the HRD has been strongly led by the HR function. Not only has the
HR function focused on managerial development, but also it has been part of the
corporate restructuring. The perception of the HR professionals was that HR was
ambitiously seeking to make its own function business-minded.

HR Kilo: We [the HR function] have made a self analysis regarding how our HR professionals
perceive themselves in Ulrich’s two-by-two matrix, and several of them feel they find themselves
in the administration box. But we are constantly moving towards the change agent role. We talk
about managing HR like business.

Industrial relations are still a common HR activity, but the emphasis is no longer as
explicit as it used to be. As the focus has shifted towards compensation and competence
development, the time and effort spent on IR has been reduced. Nevertheless, the EU
legislation has affected KiloLima in the same manner as several other case
organisations, which are stating that IR currently demands lots of effort due to the
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EWC (e.g. Charlie and MikeNovember). The differences in perception are quite
interesting and difficult to explain.

Management Kilo: The industrial relation part is of course also handled by HR, but it has become
quite invisible, it’s a part of business as usual, seldom discussed at management meetings. Union
issues are not as topical as they were in the 70s and 80s.

4.5.5. Analysis of case KiloLima

4.5.5.1. Kilo pre-merger HR roles

The HR function in Kilo appears to have played two roles, those of process engineer
and negotiating lawyer.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Negotiating Process

Advocate Lawyer Engineer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 16 The roles of the Kilo pre-merger HR function

4.5.5.2. Kilo pre-merger influencing factors

Individual level. There seems to be no evidence for any factors in the outer context
that would have influenced the role formulation. Regarding the inner context, the most
central factors appear to have been on an individual level. The HR professionals’
competence seems to have been vital.

Management Kilo: Our HR function was more focused on the aspects of the closed economy such
as issues related to labour market negotiations, and the HR manager at the time was more of a
labour market man and specialised in those issues rather than in broad HRM.
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HR Kilo: His [the HR executive’s] interest lay within industrial relations and he worked a lot with
the union and those kinds of things that were very close to his heart.

Also the attitude of the CEO regarding the HR function might have influenced the role
formulation. His expectations regarding the input of the HR function appears to have
been low.

HR Kilo: Pekka [former CEO at Kilo who became CEO at KiloLima] has said in retrospect that he
would never have thought that the HR function could play the role that it had during the
KiloLima era. He never saw anything like this during the Kilo-times.

Prior to the merger there appears to have been scarce development of the HR function,
which likewise probably could be traced to the competence of the HR professionals.

Management Kilo: When the organisation grew, the Kilo HR function did not follow.

Organisational level. On an organisational level, this could also refer to the

administrative heritage. As industrial relations and administration had always been
central to the HR function it might not have been questioned whether HR could
contribute with anything else.

Table 24 Factors influencing the roles of the Kilo pre-merger HR function

The inner Organisational x Administrative heritage

context Individual CEO / top management: x Attitude regarding HRM
HR professionals: x Competence

4.5.5.3. Lima pre-merger HR roles

The actual HR function in Lima was very small with a minor role in HRM. The
management of human resources was handled by line managers while the small HR
function at HQ handled HR administration. Therefore, I argue that the only role
identified was that of process engineer, which furthermore was only partly identified.
 104

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Advocate Process
Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 17 The roles of the Lima pre-merger HR function

4.5.5.4. Lima pre-merger influencing factors

Organisational level. The fact that Lima HR function had only a minor process
engineer role seems, on an organisational level, to have been a consequence of the
structure of the organisation and also of the administrative heritage.

Individual level. Furthermore, it was a deliberate choice made by top management to

have line managers in charge of HRM. Hence, the most important influencing factors
appear to be found on an individual level among top managers regarding their attitude
towards HRM as an area that should be handled by line managers, and their view on
the business divisions as quite independent units.

HR Lima: The philosophy was to keep the business units small enough for the line manager to be
able to handle everything himself. If a business unit grew too big, it was split into two.

Table 25 Factors influencing the roles of the Lima pre-merger HR function

The inner Organisational x Administrative heritage

context x Organisational structure
Individual CEO / top management x Attitude regarding HRM
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4.5.5.5. KiloLima post-merger HR roles

In the post-merger HR function, the process engineer role was focal. The whole HR ,
restructured in order to free resources from HR administration, but still the
administration was perceived to be central and important, although more efficient than
before the merger. The focus had gradually been shifted towards a business partner
role, and trough HR’s involvement in the integration process that particular role
seemed to have grown. The negotiating lawyer role had become invisible and the
employee advocate role appeared to be lacking. The strategy implementer role appears
to have been part of the everyday HR practices.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Negotiating Process

Advocate Lawyer Engineer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 18 The roles of the KiloLima post-merger HR function

4.5.5.6. KiloLima post-merger influencing factors

Outer context. Within the outer context, legislation appears to some extent to have
had an impact on the structure of the organisation and trigged integration and
centralisation, which in turn affected the HR function. Legislation required centralised
reporting.

HR Lima: EU legislation forced us to have a more transparent auditing system and to produce
reports more quickly. The changes have had a huge effect on HR.

Organisational level. Within the inner context, a couple of organisational factors

affecting the HR function were identified. First, the increased degree of
internationalisation of the firm seems to have put certain demands on the organisation.
In order to grow internationally the organisation profited from a united front image,
and hence chose to incorporate all units. Also the perception was that another type of
 106

competences was needed in an international firm, and hence management

development was highlighted. Second, the financial situation encouraged cost cutting,
which lead the HR function to make its processes more efficient.

HR Lima: The fact that KiloLima wanted to expand globally brought forth a need for an explicit
strategy and a visible cooperation within the firm. Also the high expenses for HR administration
forced us to be more efficient, to reduce the HR costs / employee, however, still providing the
same service.

Management Kilo: The merger created a more multinational organisation. It thus also demanded
a new kind of competence and the development of management competence and that has been
given a lot of time and effort. HR has been the driving force but no-one has ever questioned the
investments that have been made in HRD. The management group has been open to suggestions
from the HR function. HR has had a very strong and professional role regarding both HRD and
rotation programmes.

Individual level. On an individual level both the attitude of the CEO and the
attributes of the HR manager appear to have been decisive for role formulation. The
management representative summarised the achieved credibility of the HR manager
and more broadly the main factors affecting the HR role as follows:

Management Kilo: To a large extent is about communication skills, not giving up, experience,
everything that gives a person street credibility. Another affecting factor is the CEO and his way
of looking at HR.

HR Kilo: Lima had a strong HR director, who now is head of HR at KiloLima and he was already
then very experienced and possessed experience from both line management and the HR
function, with a heavy background in HRD but also knowledgeable in the competence field.

The statements above show, that the HR director was trusted by the management
group and that the HR function’s initiatives were supported. The financial investments
in HRD seem to have been easily approved. This suggests a positive attitude towards
the HR function in general and the HR manager in particular. The HR function and
several HR activities are regarded to be of strategic importance.

The HR function appears to have had an important role in contributing to business

management. Although there is no actual proof on HR contributing to the content of
the new business strategy, HR seems at least to have been a driving force in making
sure the managers meet and discuss strategy, thus creating the prerequisites for the
managers to reformulate the strategy.

The introduction of the HR centre suggested the ambition to become more efficient
existed within the HR function. Furthermore the head of HR has had an important
position in the overall corporate integration process, which as such can be regarded a
proof of HR’s strategic involvement. The fact that the finance department and the HR
function cooperated regarding the common IT tool might confirm a healthy cooperative
attitude within the organisation, but also that either function responded on the other
one’s proactiveness, and based on the existing data, the possibility that finance was
driving the change and HR was reacting cannot be excluded.

The merger context. The merger context appears to have had an indirect effect on
the reformulation of the HR function. For instance, the international growth was a
consequence of the merger. The power and influence of Lima HR manager is
interesting from the point of view that Kilo was regarded to be the leading organisation
in the merger. In this regard it seems that the merged organisations succeeded in
choosing the best practice and that it was a merger of equals in terms of negotiating
power. From Kilo’s point of view, the merger offered new insights concerning HRM.
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HR Kilo: Pekka [former CEO at Kilo who became CEO at KiloLima] has said in retrospect that he
would never have thought that the HR function could take such a role that has been taken during
the KiloLima era. He never saw anything like this during the Kilo-times.

The perception of the HR function’s input in the KiloLima merger is that HR without a
doubt had an important role.

Management Kilo: HR can absolutely add value to the planning process. Lots of questions
regarding the personnel need to be thought threw in advance, such as salary and pension
schemes, or maybe layoffs. I believe any organisation could manage without HR involvement but
it could become extremely expensive. At the end of the day it is a person question. If the HR
directors, with regards to their profile and competence, do not fit into the insider group, it’s
difficult. But in our case I do not see why HR would not fit into that group, especially when
talking about mega-mergers such as the KiloLima merger.

Table 26 Factors influencing the roles of the KiloLima post-merger HR function

The outer x Legislation

context
The inner Organisational x Degree of internationalisation
context
x Financial situation
Individual CEO / x Attitude regarding HRM
top management:
HR professionals: x Competence
x Reputational effectiveness
The merger x Power relation
context
x Understanding of the other organisation
x Growth
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4.6. Mike and November merge to become MikeNovember

The description and analysis of the current case is based on data from three in-depth
interviews and a total of ten annual reports dating from one year before the merger
(Mike and November) till eight years after (MikeNovember). Two respondents worked
within HR, one of them as country level HR manager in Sweden (hereinafter HR Mike),
and the other one as country level HR manager in Finland (HR November). Before the
merger they both worked as HR managers within different business units of the merged
organisations. The third respondent possessed a long experience within the top
management of November and was currently a member of the top management team of
the merged organisation (Management November).

MikeNovember was formed through the combination of the Swedish company Mike
and the Finnish company November. The merged organisation became one of the
world’s leading players within its particular manufacturing industry with operations in
more than forty countries.

Mike was the wealthier organisation, but November was regarded as more efficient and
profitable. Legally the merged organisation consisted of 60% Mike and 40% November,
but the executive management team was a 50-50 mix of executives from the two firms,
and the organisation became Finnish. All interviewees seemed to agree that the deal
was a true merger of equals.

HR November: Two very equal co-operators were integrated.

HR Mike: It was no hostile acquisition. It was a merger of equals. There was no clear acquirer,
instead there were two organisations integrating and trying to do the best out of it. In this case
both parties had a true interest in getting the merger work.

Initially, a management group consisting of almost 20 managers was decided on. Half
of the managers had a history within Mike while the other half had been working for
November. The former HR director of Mike became head of HR at MikeNovember and
member of the management group. He had also previously been member of the Mike
management group, while November had had no equivalent position. During the 8
years covered by the study, there seems to have been some changes in the management
group assembly each year, mainly due to retirements. Nevertheless, the CEO and the
head of HR remained the same during the studied period of time.

Table 27 Milestones of the MikeNovember merger

Date Event
Day 1 Signing of the deal
5 months EU competition authorities approved the combination
6 months Management training/workshops initiated to form
shared corporate mission, vision and values

4.6.1. Mike’s pre-integration HR function

The HR function within Mike had an administrative focus. There seemed to have been
an aspiration to become more strategic and more important, but the administrative
duties hindered fulfilment of this aim.
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HR Mike: The vision of Mike HR, although not formal, was to strengthen the role of the HR
function, and I believe the HR strategy -- to have a joint vision, started emerging during that
time. Within all business units everyone is busy doing everything. If we do not have a vision
regarding how we want to work, everyone is likely to run around as in an anthill with various
projects. That’s why it is important to have a vision, to streamline the route ahead.

HR Mike: If I’m really really honest, the HR at Mike had a too heavy administrative focus. The
challenge was then, and still is, to be more focused on strategic issues.

The main activities Mike’s HR function dealt with were: compensation and benefits;
competence development; HR planning for the future; performance appraisal; and
industrial relations. At HQ the HR function made sure there were some HR guidelines
and strategies that everyone needed to follow. The HR function was decentralised, and
consequently consisted of a small centralised personnel function at HQ while the bulk
of the HR personnel were located to the business divisions. The HR director was
member of the management team, reporting to the CEO. HR consultancy was bought
regularly.

HR Mike: External HR consultants were employed to carry out competence development and
managerial training and also to run different inquiries regarding for instance pensions and
various contracts.

4.6.2. November’s pre-integration HR function

The focus of the HR function within November was on industrial relations and
administration. In recent decades trade union negotiations had taken up a lot of time
and continued to do so. Handling recruitment and salaries were basic administrative
duties. Managing human resource development had become an increasingly important
task as well as the design and management of various performance appraisals.

Management November: The former head of HR at November was strongly involved in

competence development. He designed lots of courses for both middle and senior management.
It was sort of his lifetime work. Also he created guidelines for various HR principles such as
expatriate contracts. Common guidelines diminished the irritation and work load for those
applying for the jobs.

HR November: People start losing faith in the appraisals, as we keep measuring all the time,
while no change occurs. The basic idea with appraisals is good, but compared to the action taken,
the number of appraisals is too high.

Within November, the Head of HR was not part of the management team. He reported
to the deputy CEO.

4.6.3. Integration

The pre-merger planning was made by a handful of people. The HR function was not
part of that insider group. The HR managers heard about the deal only a few hours
before the press release. It appears as if the role of the HR function was very moderate,
as there was neither room for HR in the merger planning process, nor was there room
to discuss HR in that process. The respondent who represented management in this
study was actively involved in the pre-merger planning and summarised that very
process as follows:

Management November: HR was not involved at all. We [insiders] gave much thought to the new
organisation and its structure, which persons should be given which positions, but the HR
 110

function was not on the agenda. One of the most important things was the sales unit, because it
is so extremely sensitive. It reflects the result of the company immediately if the sales do not
work.

When the deal was signed, the top managerial positions had to be filled. To form a
picture of the available managers from both parties 200 CVs for all top positions were
collected. At HQ there was an evident overlapping regarding clerical workers that
occurred as a consequence of the merger. Every single business unit and division tried
to solve the possible overlapping themselves. When problems emerged, top
management got involved. The HR function was not involved in the process, other than
concerning overlapping among HR specialists.

Management November: it was naturally a big hassle to integrate the two firms and the HR
function was one function among others that needed to coordinate its own work and to think
about what to do with the employees that had become superfluous.

HR November: When I heard about the deal my first job was to be scared – what’s going to
happen with me and my position. When the deal is announced everyone gets scared. At
November people were thinking: What’s Mike, what in the hell is Mike?

Although a merger of equal, it appears as if people preferred to be surrounded by co-

workers they knew from before. At the time of the merger the ‘HR November-
interviewee’ was head of HR at one particular business unit in November. After the deal
had been announced the former director of that business unit was appointed director
for the corresponding business unit of the merged organisation MikeNovember.
Indirectly this ensured the further appointment of the interviewee to become head of
HR in the merged business unit, because although the former director at the
corresponding business unit of former Mike wanted his HR director to continue within
the merged company he was no longer in the position to decide.

HR November: For a while there was some insecurity, but in reality I always knew I would get
the position.

Management November: The management decided whom to keep and whom to get rid of. Then
HR was given the task to take care of those who were made redundant. HR was responsible for
the industrial relations and to make sure that all the people that were sacked were treated
equally. HR’s duty was to co-ordinate and produce common guidelines.

Another issue the organisation had to deal with upon the merger was the integration of
principles and processes. Each and every business unit had to work out which practices
to keep and which ones to get rid of.

Management November: I do not remember what the HR function worked with during the
merger integration. Within all functions and divisions people were busy deciding on which
principles, strategies and activities to keep and which to get rid of. It was such a rush in the
beginning, and I had the feeling that everyone was working with their own tasks and hopefully
even HR was doing something that was somewhat intelligent, without having the management
group interfering.

After a few months, a hundred of the most senior managers were gathered for a series
of meetings to discuss a joint mission, vision and strategy, to create a new organisation.
The meetings and seminars also aimed at creating a team spirit. For this purpose,
external consultants were hired to design the seminars. The work was co-ordinated by
the HR function, while the seminar group work was led by MikeNovember managers.

HR Mike: Generally the managers talk about technology, investments, machines and quality.
This time, 120 managers sat down and focused on HRM, which was a strengthening of the HR –
message.
 111

HR Mike: HR was involved all the time. HR was the glue. HR’s role was to be a speaking partner
both to the CEO and other managers. HR is not directly linked to business issues, and can
therefore remain neutral and give advice and come up with new ideas. Sort of a change
facilitator, lubricating the process.

4.6.4. Post-integration

The post-merger HR function was still occupied with administrative duties, although
the vision of becoming more efficient and strategic existed.

HR Mike: We are stuck in old systems and routines. We are now in the process of launching SAP
[an IT tool] and the idea is that it will free us some time that we can spend on being strategic.
Today we put a lot of time on searching, screening, and paper work. HR has a heavy
administrative role. But we are moving away from that to becoming more strategic.

The three key HR areas were stated to be: performance culture, competence
development and attract talent. The first one was about having a compensation system,
which also aimed at making the business goals and ambitions more explicit. The second
one, competence development implied that everyone should undergo development
discussions, that they were measured, and that there was an individual development
plan. The third, to attract talent is about having to ensure future competence. 30% of
MikeNovember’s employees were about to retire during the coming years and they
needed to be replaced.

HR Mike: We now have leadership guidelines, competence policies, expatriate policies, a general
training program, and guidelines for how to invest in future personnel. Lots of things have
improved, but the best is that HR’s role in MikeNovember is very strong and explicit, it is not
questioned. HR is equivalent to technology and finance. That’s a good way to sum it up.

Having said that, the HR respondent argues that the HR function still aims at becoming
more efficient.

HR Mike: The HR managers within the business units need to have a bigger influence. We need
to build networks to enhance co-operation. Also, we are introducing a payroll system, things that
can be out-sourced should be. We do this to clean the table and make place for more strategic
questions, such as who are the future managers, what are the competence level and demands,
how can we be stronger in the future.

The perception of management is that the status of the HR function has improved.

Management November: The fact that HR has lots of resources does signal that HR’s role has
become more important.

In management there seems, however, to be an ambiguity about the resources allocated

to the HR function. On one hand increased financial resources were regarded as a token
of increased importance. On the other hand, the resources were believed to be too
generous.

Management November: HR is today more active and it gets more important all the time. But on
the other hand there has been criticism regarding a too high number of new HR initiatives. HR
simply has too many resources. HR needs to have a better coordination; a clearer model
regarding who is doing what within the function. Currently the same job is being performed
twice and there is irritation because suddenly something is not done at all. That’s a question of
organisation which regards all functions, not only HR.

Top management expects the HR function to co-ordinate and create common

guidelines for various processes, such as competence development. Also, the HR
 112

function needs to decide on what matters should be globally standardised and what
needs to be kept locally adopted. According to top management, this is an important
question to which there is no simple answer.

Management November: Today I think I get more support from HR. They are better prepared
and have general guidelines and standardised documents. If for instance I get job application
letters HR offers me standardized letters of regret to tell the applicant he has not be chosen.
There are guidelines for compensation which I can base my arguments on when I raise or do not
raise the salaries of my subordinates.

Management November: HRM is extremely important, but the HR function per se is necessarily
not. HRM could also be integrated to line, with a much smaller HR function. It’s important to
take care of competence development, to treat employees equally and so on, but there is not only
one way of organising it.

4.6.5. Analysis of case MikeNovember

4.6.5.1. Mike pre-merger HR roles

Before the merger, the HR function at Mike had an administrative focus. There seems
to be no evidence of any other role than that of process engineer.

HR Mike: …the HR at Mike had a too heavy administrative focus.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Advocate
Process
Engineer
Negotiating
Lawyer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 19 The roles of the Mike pre-merger HR function

 113

4.6.5.2. Mike pre-merger influencing factors

Individual level. The factors that influenced role formulation appear to be found
within the inner context and furthermore on an individual level. There is no evidence of
external factors affecting the role, nor do the intra-organisational factors seem to have
influenced it. A lack of focus appears to have made the HR work fuzzy and inefficient.
The assumption is that HR competence and management’s interest in the HR function
were poor.

HR Mike: …Within all business units everyone is busy doing everything. If we do not have a
vision regarding how we want to work, everyone is likely to run around as in an anthill with
various projects.

Table 28 Factors influencing the roles of the Mike pre-merger HR function

The inner Individual CEO/top management: x Attitude regarding HRM

context HR professionals: x Competence (poor
organisation skills)

4.6.5.3. November pre-merger HR roles

November’s HR function was likewise rather administrative before the merger. In

addition, there was a clear focus on industrial relations. Hence, both the project
manager role and negotiating lawyer roles are identified.
 114

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Negotiating Process

Advocate Lawyer Engineer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 20 The roles of the November pre-merger HR function

4.6.5.4. November pre-merger influencing factors

Organisational level. Regarding November’s pre merger HR function, the

influencing factors appear to be within the inner context. On an organisational level,
the administrative heritage might have had an impact. The HR respondent had been
working with HR administration at November for more than 30 years, and the
characteristics of the HR function seems to have remained the same during that period
of time.

Individual level. On an individual level, the top managers appear to have had a very
limited interest in the HR function.

Management November: … and hopefully even HR was doing something that was somewhat
intelligent, without having the management group interfering.

Furthermore, there is no evidence of the HR specialists having ambitions to take the

HR function beyond an administrative role.
 115

Table 29 Factors influencing the roles of the November pre-merger HR function

The inner Organisational x Administrative heritage

context Individual CEO / x Attitude regarding
top management: HRM
HR professionals: x Competence

4.6.5.5. MikeNovember post-merger HR roles

To some extent, the post-merger HR function differed from the two previous ones.
Administration was still a core duty, but the role description had been broadened and
in addition to the negotiating lawyer role there were also signs of a strategy
implementer. Because of the EWC, the negotiating lawyer had been given more time
and space and HR’s seat in the management group was linked to its involvement in
EWC.

Management November: HR needs to be represented in the management group. Nowadays there

are so many HR issues on the management agenda, such as compensation and strikes. Also, as
part of the EWC32, after every board meeting, we have a meeting with employee representatives
that are led by the HR director. In my opinion this demands that he is a member of the team.
Tero [HR director at November prior to the merger] was never part of the management team at
November. In that respect, there has been a clear change.

32 European Works Council (see also chapter 4.1.3. and footnote 27)
 116

Strategic

Business Strategy
Partner Implementer

Proactive Negotiating Reactive

Lawyer

Employee Process
Advocate Engineer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 21 The roles of the post-merger MikeNovember HR function

4.6.5.6. MikeNovember post-merger influencing factors

The outer context. Within the outer context, legislation was an influencing factor, as
the EWC forced the HR function to focus on its negotiating lawyer role.

Individual level. As part of the inner context, factors on the individual level such as
management’s interest in and attitude towards the HR function in combination with
the HR professionals’ lack of business experience seem to have influenced the role
formulation.

Management November: Money is made in the production units. At HQ we only create expenses.
That’s why the top managers need to understand the work that takes place in the production
units. Also, HR should possess experience from shop floor to have some credibility.

Management November: We believe HR might have too many resources, because there are
thousands of new initiatives taking up the line managers’ time. The poor managers do not have
time to focus on their own jobs. This does not regard only HR, it’s the same with all support
functions. On the other hand HR today needs more resources than before as we are a more global
organisation and they need to be familiar with not only Finnish employment legislation but also
with Swedish, German etc. Also, the question of standardisation gets more complex. And we
believe that competence development is very important and demands a lot of resources. We want
to invest more in the personnel now than we did before.

Although still critical, management’s attitude towards HRM appeared to have been
becoming more appreciative.
 117

HR Mike: In the past, HR has commonly not been very highly valued, because the management
group has lacked the insight of what HR really is. HR has been regarded as a cosy coffee-making-
institution. But the truth is that HR is a strategic function. You can buy the same machines
regardless of whether your company name is MikeNovember or X o Z. But the thing that differs
is the way in which you treat your people. How do we engage and motivate people? And that
insight is what I would call the new focus of the HR function.

HR Mike: In order for HR to gain a strategic role, the top management needs to be pro HR. Also
HR needs to prove that it is truly a business partner. If HR has a too heavy administrative work
load; taking care of canteens, fire fighting, call centres, payroll and everything; the strategy focus
will be lost.

The merger context. The merger context is yet another factor that has influenced the
merger as there seems to be evidence that integration has influenced the processes and
structure of the HR function. According to the respondents, integration between the
organisations and the consequential growth initiated a closer look at the inefficiency
caused by various IT tools and record keeping.

HR Mike: We have experienced some post-merger changes. First of all, there were a dozen IT
systems within the merged company and we soon realized that we needed to find one common
tool to unite the system. Second, the head of HR and the CFO together started thinking of how to
manage HR economy, so that’s something that has changed as well.

Also, there appears to be a perception that through the understanding the parties have
got of the other organisation, there have been prerequisites for the merged organisation
to learn and improve its practices and processes.

HR Mike: Together we have grown strong. We have learnt from each other.

Table 30 Factors influencing the roles of the post-merger MikeNovember HR function

The outer x Legislation

context
The inner Individual CEO / x Attitude regarding
context top management: HRM
HR professionals: x Competence
x Reputational effectiveness
The merger x Understanding of the other organisation
context
x Growth
 118

4.7. Oscar acquires Papa and becomes OscarPapa

The description and analysis of the current case is based on data from one in-depth
interview, a number of annual reports and press releases, and also on two journal
articles in which the post-merger head of HR at OscarPapa (formerly HR manager at
Oscar) was interviewed. The respondent I interviewed for this study had been working
as head of HR at Papa before the merger, and had at the time of the interview been
made redundant as a consequence of the merger (hereinafter HR Papa).

The deal took place when the Swedish Oscar acquired the Finnish Papa. The rationale
behind the deal was the aspiration to become a leading pan-Nordic group within its line
of business, which was in the service industry. Both important annual cost savings and
substantial revenue synergies were expected. (Press release)

The intention was furthermore to integrate Oscar’s Finnish subsidiary, Papa, which was
several times larger. The consolidated business activities would operate in Finland
under the name OscarPapa, while the parent organisation in other countries was
known as Oscar.

HR Papa: I heard about the bid at the same time as all other employees, i.e. from the press
release. There was an insider group who was aware of the deal in advance, but I did not belong to
that. HR had no role in the deal. HR was not involved in the pre-planning process in any way,
neither at Papa nor at Oscar.

Table 31 Milestones of the OscarPapa merger

Date Event
Day 1 Signing of the deal
1-12 months Technical integration
12-24 months Integration of values, cultures and leadership

4.7.1. Oscar’s pre-integration HR function

Oscar’s pre-merger HR manager was contacted for an interview, but she refused, citing
a lack of time. Hence, the thesis possesses little data on Oscar’s pre-merger HR role.
Nevertheless, two journal articles in which she is interviewed were used as secondary
data. In addition, the former HR director at Papa gave a brief comment regarding her
perceptions of the HR function at Oscar, and also another HR professional from the
thesis interviewee sample has reflected upon Oscar’s way of handling HRM.

HR Papa: At Oscar, the HR function consisted of one person only, the HR director; there was no
staff. Her responsibility was within HRD; with the help of external consultants she was in charge
of the learning solutions. At Oscar, the finance department handled IR issues.

The statement suggests that the role of the HR manager was very limited, as there was
in fact no HR function. This is seconded by another respondent, who argued that
Oscar’s management openly communicated their strategy which was not to have any
HR function.

HR Lima: They [Oscar’s management] argued that their success depended on not having an HR
function. They wanted the managers to take responsibility – according to them having an HR
function would have implied that the managers would have given up the responsibility to HR –
because that was the best way of ensuring that managers got to know their employees and
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understood their needs. It was a well-considered philosophy, it was not that they did not care;
they truly believed it was the best way of doing it.

4.7.2. Papa’s pre-integration HR function

At Papa, the HR staff consisted of 16 professionals, and catered for everything within
HRM except the payroll, which was outsourced. The entire HR staff was located at the
HQ; there were thus no HR professionals in the business divisions.

The HR staff was divided into two teams, namely the HRD team and the IR team. The
HRD team was in charge of management development, training and development,
recruitment etc, while the IR team was responsible for employment-related issues,
contact with the outsourced payroll, health care, expatriate packages and HR issues
regarding organisation integration and employment contracts. The head of HR, who
held a degree in law, was in charge of IR, including collective agreements and
negotiations with the union.

HR Papa: The streamlining of employment contracts was a very time-consuming task as Papa
had grown through a large number of small acquisitions and the employment terms varied
tremendously.

HR was represented in the executive management by the person responsible for HR,
marketing and communication. Beneath her was the respondent who was head of HR.

HR Papa: HRs relationship to management grew stronger over time. When I joined the firm HR
was not regarded as very important. As we got the basic administration to work, we earned a
higher position. My strong belief is that the role as a strategic partner is earned through hard
work, by making sure the administration runs smoothly.

4.7.3. Integration

When the deal had been signed, a number of integration groups were established, and
employees were asked to seek the best practices.

HR Papa: The technical integration was very fast, and much in line with Papa’s way of handling
M&As. In every group the chairman was from Papa, while the secretary was a former Oscar
employee.

Papa had vast experience from earlier acquisitions, while Oscar’s Finnish subsidiary
was less experienced in the area. The integration model previously used at Papa was
also applied in this integration, and the head of integration at Papa was part of the
integration group, where Oscar was strongly represented. Regarding HR integration
duties, such as the co-operation negotiations, former Papa people were not invited.

Early on it was decided that the HR director from Oscar would continue as head of HR
in the merged organisation, while the head of HR at Papa was made redundant. The
one who was chosen for the job had three years of experience of HRM, having focused
on training aspects. The one who was made redundant had been working in HRM for
twenty years and was soon appointed head of HR at a Finnish company listed on the
Helsinki stock exchange that employed more than 4000 employees.

HR Papa: Oscar entered the organisation with the perception that Papa did not know anything
about how to run the business, and that they [Oscar] needed to tell us [Papa] what to do. This led
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to Papa employees coming to me crying, and I tried to comfort each and every one. It was a clear
acquisition, even including features of a hostile takeover.

When the technical integration was complete, the focus was shifted towards an
integration of values, cultures and leadership, which was carried out with help from
external consultants, and concerned all line managers. In a journal interview published
15 months after the merger, the HR manager stated the following:

The organisation has undergone quick and large changes, and we are now in the process of
switching from technical integration to a phase when corporate cultures are brought together
and common values are internalised. In this HR has a significant role.

4.7.4. Post-integration

Oscar’s former HR director became head of HR at OscarPapa and got to establish the
HR function for the merged organisation. The parent organisation also had operations
in the other Nordic countries as well, in those the HR function varied from being
centralised to being decentralised. The different countries were very independent when
it came to administration. To begin with, OscarPapa’s HR function resembled Oscar’s
pre-merger HR in the sense that it did not seem to have much time or space.

Papa’s pre-merger HR director was interviewed only a couple of weeks after having
been notified, and argued the following:

At Papa, HR had a big role. Now HR is a sub-function to IT and administration. I find it

surprising as it is quite a big knowledge-intensive organisation, it will certainly be interesting to
see how the organisation develops.

An HR function employing 13 HR specialists was soon created, and the HR manager

became member of the management group.

HR OscarPapa: As the head of HR I am responsible for aspects linked to recruitment,

development, and employment relationships including the payroll. We work very close to line
managers. We are a support function, thus our aim is to find effective ways of supporting the
business. We add value by helping line reach its goals. Also, we take care of the personnel, and
through helping the employees we also aid in meeting customer needs. (secondary data – 15
months after the signing)

After yet another year, the HR manager gave an interview to another paper stating the
following:

HR cannot define strategic knowledge if HR is not aware of the business goals. Therefore, HR
needs to be part of the management group, working close to the core business.

4.7.5. Analysis of case OscarPapa

4.7.5.1. Oscar pre-merger HR roles

Prior to the merger, Oscar had no actual HR function. There was an HR manager
working alone on training issues, while the finance function handled HR’s finances and
line managers were in charge of HRM activities such as recruitment. Thus, no role was
identified.
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In chapter three it was argued that a selection criterion for the case organisations was
that they needed to be big enough to have a visible HR function. Oscar did not have a
visible HR function, not because the size of the organisation would not have called for
it, but because the top management team had decided not to have such a function. As
Papa, which was the other merger party, clearly fulfilled the selection criterion it was
decided to include OscarPapa in the case sample.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Advocate Process
Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 22 The roles of the Oscar pre-merger HR function

4.7.5.2. Oscar pre-merger influencing factors

Individual level. The reason for not having an HR function was a deliberate choice
made by the management group. It can be assumed that it was a question of the CEO’s
attitude towards HRM.

Organisational level. On the organisational level it can be regarded as part of the

business strategy not to have an HR function. If quick profits can be achieved without a
costly HR function, it might be a good strategy not to have one.

HR Papa: The CEO is very profit-minded and believes that the organisation will manage without
HR.

The administrative heritage and also the type of workforce, i.e. white collar workers,
appears to have strengthened the beliefs on which the strategy was built.
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Table 32 Factors influencing the roles of the Oscar pre-merger HR function

The inner Organisational x Administrative heritage

context
x Type of workforce (white collar)
x Business strategy
Individual CEO/top management: x Attitude regarding HRM

4.7.5.3. Papa pre-merger HR roles

In contrast to Oscar, Papa had a traditional HR function concerned with industrial

relations and administration. Also strategically important activities, such as
management development, were on the agenda. Hence, the process engineer and
negotiating lawyer roles were clearly identified, while elements of the strategy
implementer also could be found.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Process
Advocate Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 23 The roles of the Papa pre-merger HR function

4.7.5.4. Papa pre-merger influencing factors

Organisational level. Within the inner context, influencing factors can be found on
both the organisational and individual levels. Papa had experienced a number of M&As
and hence employed people who had initially been employed under varying
circumstances. Thus Papa had to face a number of different employment contracts and
conditions, which strengthened the role of the negotiating lawyer.
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Individual level. On an individual level, the HR manager’s personal traits appear to

have influenced role formulation. She seems to have possessed both competence and
high ambitions.

HR Papa: During recent years HR professionals have willingly remained in their closed circles
talking HR slang. You have to understand the business, to know your line of business, to know
the people, in order to be able to discuss with them. Line managers are not patient enough to
listen to rubbish. The HR administration has to run smoothly, that’s how you earn credibility.

Also, the attitude of CEO and the management towards the HR function appears to
have played a role, in this case hindering the HR manager in some of her efforts. The
management group was not unanimous when it came to the HR function and the role it
should play. The Papa HR director wanted to be included in the management group,
but the CEO was against it.

HR Papa: Depending on the backgrounds of the managers, opinions regarding HR varied. It was
not a question of age. The pro-HR executives either possessed an academic education or
experience from large organisations where HR had had a visible role. Self-made men with
experience from smaller organisations only were more reluctant.

Table 33 Factors influencing the roles of the Papa pre-merger HR function

The inner Organisational x Structure of organisation / growth through

context acquisitions
Individual CEO / top x Attitude regarding HRM
management:
HR professionals: x Competence
x Reputational effectiveness

4.7.5.5. OscarPapa post-merger HR roles

The role of the HR function of OscarPapa appears to have gone through rapid changes
during the years that followed the merger. Training had been valued in Oscar before the
merger and developmental issues continued to be on HR’s post-merger agenda.

The way in which HRM was managed differed as an actual HR function was set up in
conjunction with the merger. HR administration such as payroll became part of the HR
function and HRD continued to have a focal role.
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Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Process
Advocate
Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 24 The roles of the OscarPapa post-merger HR function

4.7.5.6. OscarPapa post-merger influencing factors

Individual level. The factors that appear to have influenced role formulation are
found within the inner context. On an individual level, the CEO attitude seems to have
steered the structures of HRM. The fact that Oscar’s pre-merger HR director was
chosen over Papas HR director seems to indicate that the management was not
interested in having a prominent HR function.

Merger context. The merger appears to have influenced the HR function in several
ways. First, the power relation caused by the takeover had an important impact on the
HR function, as the acquirer Oscar as able to take the lead. Second, the integration
phase led to important restructuring of the HR function. Although OscarPapa initially
had no HR function, two years after the merger the organisation employed 13 HR
professionals and the HR manager had become a member of the management team.
Interestingly, the CEO and the HR manager remained the same during this period of
time. One can only speculate about the reasons behind the increased importance of HR.
During the two years when the biggest change occurred, the outer context remained
stable, as the Finnish market was experiencing stable growth. Within the inner context,
the organisational attributes such as degree of internationalisation, structure of
organisation, type of workforce, and financial situation appear to have been the same as
prior to the merger. Also, as already noted, key individuals remained the same.
However, a change in attitude appears to have occurred, perhaps as a consequence of
the training and development that external consultants provided, or as a result of the
understanding of Papa obtained by Oscar management thanks to the acquisition.
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Table 34 Factors influencing the roles of the OscarPapa post-merger HR function

The inner Individual CEO / top management: x Attitude regarding HRM

context HR professionals: x Competence
The merger x Power relation
context x Understanding of the other organisation
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4.8. Quebec acquires Romeo and forms QuebecRomeo

The description and analysis of the current case is based on data from two in-depth
interviews, a number of annual reports of both pre-merger organisations and the post-
merger organisation and also an academic article which discusses one of the pre-
merger organisations and its merger experience. The first interviewee was part of the
pilot sample. Before the merger he had served as Romeo’s HR manager, and post-
merger he was appointed country level HR manager of QuebecRomeo Finland
(hereinafter HR Romeo). The other interviewee had long experience of managerial
positions within Quebec and after the merger was responsible for organisation and
governance within the HR function (hereinafter HR Quebec).

QuebecRomeo, a corporation operating in the service industry, was created when the
Swedish Quebec acquired the Finnish Romeo. A few months before the merger took
place, Romeo had experienced a severe financial crisis. As a consequence, the share
price dropped, which made it possible for Quebec to acquire the organisation.

The purpose behind the formation of QuebecRomeo was to create a company that was
more capable of creating value for its customers and shareholders than the two original
organisations. QuebecRomeo became a leading company in the Nordic and Baltic
countries, within its line of business.

Although technically an acquisition, the QuebecRomeo deal is in several respects

regarded to be a merger. Common values and visions were established as the result of a
long consolidation process. The intention was to create something new and truly
involve each and every employee in the change process.

HR Romeo: This is a true merger; we have gone through a lot of trouble in order to create a new
entity. It has been a mental process, which has differed a lot from the previous acquisitions we
have made.

Table 35 Milestones of the QuebecRomeo merger

Date Event
Day 1 Signing of the deal
4 months New CEO appointed externally
EU authorities approved the deal
9 months Completion of the merger – all share holders accepted
the deal
12 months New HR director appointed externally

4.8.1. Quebec’s pre-integration HR function

At HQ, Quebec had a traditional HR function including elements such as compensation

and benefit; training and education; health and welfare; and also, due to the personal
interest of the HR manager of the time, organisation and governance.

HR Quebec: The foundation of HRM at Quebec was administration. An important topic at the
time was salary issues and increases, which were closely linked to industrial relations: how much
can we afford, how do we function within the union, how do we act within the employers’
federation? The social democratic government made sure low salary workers had a higher salary
than the Swedish market average, and high income managers earned less than the market
average.
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HR planning demanded a vast amount of resources. As a state owned organisation part

of the recruitment strategy had been to make a social contribution by recruiting people
in need.

HR Quebec: HR dealt with issues such as what to do with this incompetent group of people? Can
we manage to train them or shall we just hope they will leave the organisation? How could we
possibly speed up that process? Or what to do with this very skilled group of employees who are
likely to leave us because we don’t have any more interesting jobs to offer them? I hence
considered the HR work very traditional and functional.

Another HR topic was the work environment, safety at work, and absence due to
sickness. Also, personnel development was reported to have demanded lots of time and
resources, because the employees often lacked basic education.

At HQ the HR staff consisted of 15-20 persons. All together, Quebec employed 250-300
within the HR function. In the business units there were personnel administrators
taking care of the administration line managers asked them to cater for.

HR Quebec: The HR density has traditionally been very high at Quebec. This is a consequence of
Quebec being a government-owned organisation, where personnel issues have always been
highly valued. Also, personnel management within the government is subject to a lot of
bureaucracy, as for instance vacancies need to be declared open, the recruitment procedure
needs to be documented and decisions well justified.

Quebec had been introduced on the stock exchange some 10 years before the merger,
and regarding HR aimed at restructuring of compensation and benefits to behave more
like a privately owned organisation, to have compensation structures that resembled
those of the main competitors.

HR Quebec: To get rid of our non-proportionally expensive blue-collar workers we decided to

outsource. In the 1990’s the personnel diminished from approximately 50.000 to 15.000
employees. This is partly a consequence of outsourcing but more importantly of technological
development.

The HR function was reported to have been mainly reactive, supporting line whenever
line called for it.

HR Quebec: Most of the HR initiatives came from line. As an example, the head count was
diminished every year and HR was asked to take care of the layoffs, and everything that implied
in terms of collective bargaining etc.

Despite its administrative and reactive role the HR director was member of the
management group.

HR Romeo: HR’s role in Quebec was bigger than in Romeo. Quebec was a more stable, and
domestic organisation with more settled operations.

4.8.2. Romeo’s pre-integration HR function

During the economic boom in the 1990s, Romeo experienced a tremendous success and
was eagerly expanding its operations. Due to the prevailing business situation, money
kept rolling in through initial public offerings (IPOs) and the share price skyrocketed.
This success encouraged people to look for employment in the organisation.

HR Romeo: People were standing in a queue hoping for a job at Romeo. Because of the high
share prices, the company image as an employer was extremely high. Due to the business
situation, no-one needed HR. HR is no end in itself, on the contrary HR reacts to the business
 128

situation. And the prevailing business situation gave no role whatsoever to the HR function at
Romeo. Investing in people was regarded as a waste of money, since were people willing to work
for us anyway.

The activities of the HR function were reported to have been administrative only. The
screening of job applications, for instance, was a time-consuming task.

HR Romeo: It was all about being an internal service provider.

4.8.3. Integration

Several years prior to the merger the HR managers from a number of European
organisations in the line of business had started to have network meetings twice a year.
Current HR activities were openly discussed giving each and everyone the opportunity
to benchmark their own organisation’s HR function.

HR Romeo: It felt very natural to begin the co-operation with Quebec HR as I had known them
for years through the network.

When the deal was finally accepted, it was announced that all positions at the
QuebecRomeo HQ were vacant, and everyone both internally and externally was able to
apply for them. QuebecRomeo was soon divided into a number of profit centres; each
country became a separate profit centres. This implied that the need to integrate was
minimised. Only HQ needed to be integrated, i.e. create one HQ out of two.

HR Quebec: An obvious HR issue, when merging two giant organisations is that there will be one
head quarters too many, in this case the Romeo HQ.

An important task for HR was to man the HQ as quickly as possible. However, this
could not be done immediately as one had to wait for the Romeo shareholders to accept
the deal. During this period, Quebec was not allowed to search for the best employees
at Romeo.

HR Quebec: The manning of the HQ and the process of getting the new staff started implied a
huge workload for HR.

The merger implied a heavy focus on synergies. From HR’s point of view this raised
questions of legality: was it legal to dismiss all those people, how fast can one get rid of
the people according to the Swedish legislation; and questions of a practical nature: will
the organisation manage with fewer employees?

HR Quebec: This was not difficult, it’s all about mathematics, but it implied a lot of work for HR.

Quebec’s HR director left the organisation during the initial merger process. At HQ
there was hence no HR director during the merger integration. A new HR director was
recruited externally at the end of the integration process. Nevertheless, the HR function
appears to have been given quite a visible role. Both interviewees were part of the four-
man-strong integration team.

HR Romeo: The integration team was small consisting of the CEOs and HR managers of the both
organisations. We went through all applications and decided who to appoint to what position. In
that situation HR could not have been given a more important role.

The Quebec interviewee had a vast experience, not only within HR but also
organisation and government including strategy. Hence, he might not only have been
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chosen for the integration team because of his position within HR, but because of his
personal background and experience.

HR Quebec: I was not there as a strategy professional, although it probably was good that I
combined strategic thinking with HR. It was the HR issues that mattered; strategy was handled
by the management group. How I decide to describe my own role [HR’s role] is a question of
conscience. As we were four people in the integration team, two representing HR, I drew the
conclusion that the management group valued HR highly.

The fact that both organisations were formerly state owned implied an additional
element to the integration as the organisational structures were traditional. Increasing
shareholder value also implied taking into account the viewpoints and values of the
governments of the two neighbouring countries.

HR Quebec: First, as the Finnish and Swedish governments were large shareholders, it was
important to avoid the international match and to decide which plants to close and which plants
to locate in what country, based on well-justified arguments. I feared quarrels about Finnish vs.
Swedish job openings and desperately wanted to avoid bad will.

When the initial negotiations regarding the merger took place, HR was not informed.
Nevertheless, as the Finnish government was an important shareholder, employee
issues such as how a possible merger would affect the employees, received a lot of
attention.

HR Romeo: HR issues were very much taken into consideration, probably thanks to the state.

QuebecRomeo’s top management team constituted almost a dozen positions, including

the HR director. A third of the positions were held by former Romeo managers, while
two thirds were held by managers with a past in Quebec.

4.8.4. Post-integration

Post-merger, the most important HR task was perceived to be HR planning.

HR Romeo: The main HR duty is to make sure the business operations have the needed
resources at their appliance currently and in the future.

In order to guarantee that the organisation had the right number of people with the
right competencies in the right jobs, the HR function divided its job into four main
responsibilities, specifically competence development; internal rotation; HR support;
and well-being.

Competence development had become topical as attracting and keeping competent

employees was no longer so easy. In the post-merger organisation HRD was stressed at
all levels. The role of the HR function was to make sure the HRD undertakings were
carried out properly and that they supported the business.

HR Romeo: We emphasise competence development including goal setting and performance

appraisal. HR designs the procedures and makes sure the process is carried out according to the
guidelines. This is believed to support our business goals. An essential part of this is
management development.

Internal rotation was led by the HR function, and regarded as a means of ensuring that
skilled employees were offered new interesting positions and hence would stay within
the organisation.
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The HR support demanded a vast amount of resources. The aspiration was to

streamline and standardise in order for HR to benefit from synergies. However, in
terms of HR staff, two thirds were still occupied with administration while one third
worked with developmental issues. A new IT system, implying self-service was about to
be introduced, which ought to minimise the problem.

HR Quebec: In Sweden we have 17 different IT systems for HR administration. It’s the same in
Finland. Taking into account that our company operates in several countries the total number of
IT systems for HR purposes currently easily amounts to 100. You don’t have to be Einstein to
figure out this is expensive and inefficient.

HR Quebec: In the future there will be only one IT platform and several common tools. This will
concern the company as a whole, naturally also the HR function. We will probably have common
competence development programs etc. But this change is not HR-driven, it’s driven by the
company and the market situation.

In the post-merger organisation, there was an emphasis on employee well-being. From

the organisation’s point of view there were two important reasons for caring about the
personnel. First, it was believed that the way in which employees were treated, was
reflected on how customers were treated. Second, the cost of keeping existing
employees was believed to be lower than the cost of recruiting new ones.

HR Romeo: We emphasis well-being in order for our employees to enjoy their work and stay
with us.

The HR function of the post-merger organisation differed from the pre-merger

functions with regards to degrees of freedom. The HR professionals at HQ did not dig
deep into each and every HR issue, for instance no-one at HQ looked at work
environment issues or at competence development, as that was taken care of within the
business units.

HR Quebec: We do not need to hold their [business HR] hands. At HQ HR focuses solely on the
top managers, a group of 200 people. We are on top of things regarding their job situations, the
need for successors, compensation and benefits. Beneath this group of people, we don’t actually
care.

4.8.5. Analysis of case QuebecRomeo

4.8.5.1. Quebec pre-merger HR roles

Within the pre-merger HR function of Quebec, two HR roles can be identified, namely
the process engineer and the negotiating lawyer. The process engineer’s duties were to
cater for basic administration and education, while the negotiating lawyer was
concerned with e.g. statutory personnel negotiations.
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Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Process
Employee
Engineer
Advocate
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 25 The roles of the Quebec pre-merger HR function

4.8.5.2. Quebec pre-merger influencing factors

The outer context. Within the outer context, legislation might have affected the role
formulation. Swedish legislation severely restricted layoffs, which led the HR function
to get heavily involved in industrial relations on the one hand and competence
development, or better referred to as education, on the other hand.

Legislation forced the organisation to act in the interests of the personnel, rather than
in the interests of the organisation and economy. This implied an emphasis on training
and education an also on industrial relations. Quebec trained and developed the skills
among its employees, just to be able to get rid of them. Quebec struggled for a long time
with a distorted age distribution because there were too few new recruits.

HR Quebec: We educated them to get rid of them, that’s the truth. We have been busy sacking
people since the 90s. There have been some radical layoffs. And today we have a highly distorted
age distribution due to Swedish employment security. As we have been letting people go, we have
not been able to recruit many people for the last 15 years.

Organisational level. Within the internal context, ownership appears to have played
an important role. Although Quebec was listed on the stock exchange, the state
continued to be an important owner. State-owned organisations have traditionally had
lower profit expectations than private companies. Nevertheless, expectations for social
security contributions might have been a tradition. State ownership implied a lot of
bureaucracy and made the HR role heavy in administration and IR. Also, state
ownership implied a tradition of recruiting less educated people, which led to a heavy
emphasis on training and development.
 132

HR Quebec: We had lots of issues regarding personnel development, which was sadly a
consequence of the organisation’s tradition of recruiting less-skilled people. We helped people
without a basic education who had joined the organisation to continue their studies.. Employees
without a high-school diploma were supported to get one. Also, people lacking a university
degree were encouraged to finish their studies. Hence, we put a lot of emphasis on basic
education. The generous attitude was strongly present during the 80’s and 90’s.

The respondent refers to the organisation’s traditions. The ownership appears to have
affected the administrative heritage, and perhaps did the ownership also influence on
the business strategy, which in turn affected the traditions/administrative heritage.

Table 36 Factors influencing the roles of the Quebec pre-merger HR function

The outer context x Legislation

The inner context Organisational x Administrative heritage
x Business strategy
x Ownership

4.8.5.3. Romeo pre-merger HR roles

Romeo’s HR function had virtually no role.

HR Romeo: … And the prevailing business situation gave no role whatsoever to the HR function
at Romeo […] It was all about being an internal service provider.

Hence, process engineer is the only identified role.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Process
Advocate Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 26 The roles of the Romeo pre-merger HR function

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4.8.5.4. Romeo pre-merger influencing factors

Outer context. Within the outer context, the economic situation at the time was
favourable.

Organisational level. According to the respondent, the business situation

determined the (lack of) role of the HR function. No-one needed HR as the business
continued to flourish. The management group chose a short term strategy, as they
chose not to plan for the future, but to enjoy the prevailing boom. At the end of the day,
it was all about the money. Romeo performed very well and the strategy was to increase
profitability, which implied cost-cutting.

HR Romeo: HR should not produce too much quality. If the organisation manages with X
amount of HR, that’s enough. It’s against the organisation’s interest to produce more, as the
costs also would rise.

Individual level. On an individual level, the top management’s attitude towards the
HR function could be regarded as an additional influencing factor.

Table 37 Factors influencing the roles of the Romeo pre-merger HR function

The outer context x Economic cycle

The inner context Organisational x Business strategy
Individual CEO / top management: x Attitude regarding
HRM

4.8.5.5. QuebecRomeo post-merger HR roles

The post-merger HR function possessed an obvious process engineer role. The HR

support demanded much time and money, and time was spent on streamlining the
processes. The employee advocate role was receiving increased attention, as employee
well-being and comfort were emphasized. Also, some elements of the strategy
implementer were identified, as HR planning and HRD were given increased attention.
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Strategic

Business Strategy
Partner Implementer

Proactive Employee Reactive

Advocate

Negotiating Process
Lawyer Engineer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 27 The roles of the QuebecRomeo post-merger HR function

4.8.5.6. QuebecRomeo post-merger influencing factors

Outer context. Within the outer context, the economic environment seemed to have
influenced the post-merger role. Employee wellbeing was emphasized as the
organisation feared employee loss, which had to do with demography and competition
about skilled personnel.

HR Romeo: The future HR challenges are among others to take the management development to
such levels that we manage in the competition for the best employees. The human point of view
will become more emphasized. Soon we will suffer from a lack of employees. The employer
profile, as a good employer, becomes more important.

Organisational level. Within the inner context, influencing factors can be identified
on both an organisational and an individual level. On the organisational level, the
instability of the Finnish profit centre appears to have hindered the HR function from
pursuing some projects. At a certain stage of time, there were frequent changes within
the Finnish management group, which made the environment too turbulent to cope
with the introduction of competence development programs.

HR Romeo: The management needs to commit to that kind of job. If there are CEO swaps every
six months it’s impossible to introduce a new competence development scheme.

Turbulent times might thus imply that management is busy taking care of issues other
than strategic HR initiatives. During busy times, management is arguably not likely to
give time to HR to bring fourth new initiatives, if it has not been a business partner. It
is thus argued that in order for HR to successfully carry out new initiatives there must
be some stability and management has to be open for suggestions. The business
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strategy also appears to have changed, as the pre-merger short term strategy, which
was the hallmark of Romeo’s management, has given way to a long-term strategy taking
into consideration future HR planning.

Individual level. On the individual level, there were some important changes with
regards to the HR function when the merger took place, as both the CEO and the HR
director were new to the organisation and thus might have added new elements to the
merged organisation. The respondents did not bring up anything in particular
concerning the input of the HR director, but regarding the CEO it appears as if there
had been a shift in attention given to the HR function as the new CEO was appointed.

HR Romeo: My impression is that the management group thinks highly of HR and regards the
HR function to be as responsible for business success as any other function. I could not ask for
more, the management group could not give HR a bigger role than it already does. The rest is up
to HR and how well we manage to perform.

This is nevertheless only a statement made by an HR manager about managements’

expectations. The actual evidence that HR has a strategic role is not equally convincing.

The merger context. The merger context had a certain impact on the HR function.
As Quebec was the acquirer it took the lead in the integration and the merged HR
function came to resemble that of Quebec.

HR Romeo: Traditionally HR has had a more important role within Quebec than in Romeo, and
as this deal was drawn up by Quebec, HR was brought along in the integration phase, having a
quite central role.

Table 38 Factors influencing the roles of the QuebecRomeo post-merger HR function

The outer x Demography

context x Economic environment
The inner Organisational x Organisational instability
context Individual CEO / top x Attitude regarding
management: HRM
The merger x Power relation
context x Understanding of the other organisation
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4.9. Sierra and Tango merge to become SierraTango

The description and analysis of the current case is based on data from two in-depth
interviews and a number of annual reports. One of the respondents was head of HR.
Prior to the deal he had held a position as line manager at Tango (hereinafter HR
Tango). He had been working within the organisation for several years when the deal
took place and also possessed previous experience from HR. The other respondent
represented top management, being deputy CEO. Prior to the deal he had been CEO of
Tango (Management Tango).

SierraTango was formed as a result of the merger between the two Finnish
manufacturing organisations Sierra and Tango. Officially, the deal was referred to as an
amalgamation33 merger. A new company, SierraTango, was established, and the Sierra
and Tango shares were exchanged for SierraTango shares (annual review).

Management Tango: The SierraTango deal was a merger of equals as neither party was much
bigger, nor did one gobble up the other.

The merger was assumed to bring significant synergy benefits, in terms of e.g. greater
production efficiency and exchange of know-how.

Table 39 Milestones of the SierraTango merger

Date Event
Day 1 Signing of the deal
2 months EU authorities approved the deal

4.9.1. Sierra’s pre-integration HR function

Prior to the merger, line managers had an important role in HRM. Education for blue
collar workers, for instance, was taken care of by line managers. At HQ, Sierra had a
centralized HR function, which however, was mainly concerned with industrial
relations. Training and development was an emerging theme, as a person in charge of
training and development had recently been recruited to the HQ, but yet in its baby
shoes.

HR Tango: Concerning both organisations, the HR function at divisional level was ok. They took
care of occupational safety and health as well as of education. The HR managers were often
regarded as the right hand of the line managers. But the HR function at group level was very
poor.

At Sierra the main HR roles were those of the administrative expert and contracts
manager.

HR Tango: The focal HR activities were the same in the two companies, i.e. industrial relations
and administration. At Sierra the IR issues were handled centrally, while at Tango everything
was managed at divisional level in a decentralised manner. Formally things were stricter at
Sierra.

33An amalgamation is the process by which two or more companies or legal persons merge into a single
entity
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4.9.2. Tango’s pre-integration HR function

As stated above, industrial relations and administration were the top priorities of the
HR function at Tango, and HRM was managed in a decentralised manner within the
business units. Tango consisted of a number of very independent business units. At HQ
there was a small administrative HR function, however lacking an HR director. Top
management did not have high expectations forthe HR function.

Management Tango: It was more about personnel management than HRM. Development issues
were not yet on the agenda. Also, the personnel function was less operative than the HR function
today is.

The subsidiaries were over all very independent, with some degree of co-operation. The
HR managers from different subsidiaries did from time to time meet and discuss HR
procedures.

HR Tango: The sessions were chaired by someone from the HQ, but the structure was far from
being a formally organized HR function.

4.9.3. Integration

The merger took place during a time when the Finnish economy was growing, and
hence profited from the boom, as no layoffs were needed. On the contrary, the
immediate focus was on development. The CEO together with the deputy CEO decided
that no-one would be dismissed as a consequence of the merger.

HR Tango: The decision took away all anxiety and fear. As people could relax and remain calm,
my job, to build the new organisational structure, was made much easier.

As in every merger, there was, however, one HQ too many, which implied complete
restructurings of the HQ. In the initial planning and designing of the new HQ,
including all the positions it should include, it was decided that the HR function needed
a manager at top level.

Management Tango: Together with the CEO of Sierra, who was already appointed CEO of the
merged organisation, we discussed the future appointments within the new HQ. As I had more
experience of HR than he did, I told him we should bring HR to HQ, and that we needed a
visionary person who had the ability to see around the corner, and that Erik was our guy.

To start with, the merged company was organised into a number of profit centres, in
order to maintain control of the whole organisation. Soon, however, it was realised that
internal competition emerged and the structures needed to be changed. Within the
change management, which was regarded to be closely linked to corporate cultures, HR
was given a central role.

Management Tango: Erik very quickly brought cultural issues to the table, and we [management
group] reviewed our corporate values. HR had a leading role in organising and hosting training
sessions for managers and middle managers regarding the new organisational values and
culture.

The HR manager believed that the corporate culture was important because the
organisation needed to be able to talk about ’our way of doing things’ and say ‘this is the
way things are done in our organisation’. A united culture was believed to make
employees feel secure, and to distance the organisation from contrasts between the old
cultures of the pre-merger organisations.
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HR Tango: To establish a new culture is an extremely sensitive process, and the pace of it needs
to be adjusted according to the employees needs.

The philosophies of the pre-merger organisations differed. At Sierra things were strict
and organised and the organisation was based on profit centres, while Tango comprised
a number of subsidiaries with high degrees of freedom and was perceived to be
employee-friendly.

Management Tango: It could not have been more different

One of the primary goals of the post-merger HR function was to get people from both
organisations to work together, to co-operate. Hence, the focus was on management
development, aiming at creating a united corporate culture and building a network of
people. During the two first years of the merger, the defining of the elements of the new
corporate culture, and the management development were key HR activities.

HR Tango: It was about designing a desirable corporate culture, working on the structures and
thinking of what the HR function can do to reach the corporate goals and it was about selling the
ideas to the management team and building structures supporting the integration. It was a very
exciting job, in which I profited from my studies in psychology and my experience from line.

Management Tango: Prior to the merger the need for any education at HQ was very limited, but
due to the merger that changed quickly, as we needed an HQ training function to support us in
the designing and implementation of the new organisation structures.

The management development scheme concerned 3,000 managers and consisted of a 2

week education. That implied 240,000 hours of training, which the HR function
managed independently.

HR Tango: In retrospect, it was a huge success to mix people from different parts of the
organisation, it made people melt together.

Also, it was a huge investment, to allocate 240,000 working hours on training, time
that could have been spent on the core business. The generous investment indicates
that the management group truly believed in the training program and valued HR
highly.

At SierraTango it is believed that the company culture is of high importance when it

comes to making a merger work. The HR function can be supportive in the process, by
assessing the existing pre-merger cultures and forecasting possible problem areas so
that they can be avoided and bridges can be built where e differences are found. In an
ideal situation this is done during the due diligence phase.

4.9.4. Post-integration

As the merger took place management decided to bring HR to the HQ. Within the post-
merger organisation, initial HR duties were to design a new HR function, including
structure, values, aims, and policies. The merged function wanted to build new
procedures for various HR activities that needed to be unified (such as bonus schemes,
performance appraisal, the setting of individual objectives, recruitment and so on).
Working on the company image as an employer and the attractiveness of the
organisation were also prioritized.
 139

The two pre-merger HR functions were both mainly involved in administration and
industrial relations. Within the post-merger HR function the number of activities and
roles increased, although the basics were still catered for.

HR Tango: One thing leads to another. Administration and industrial relations need to be taken
care of before the function can move further to other tasks. One cannot be too picky and chose
not to work on the administration; it needs to be taken care of as well. But the value is added
when the HR function reaches the business partner role.

After the merger, the trend within HR at SierraTango was nevertheless that less time
was spent on administration and more on development. Processes had been made more
efficient by the introduction of a united IT-system, in which all common HR procedures
and rules could be found.

HR Tango: HR has moved from being the one who sends the job ads to the newspaper, to a
function that is involved in the organising of the corporate structure, with a visionary role and is
a part of the group management.

The HR activities have shifted during the post-merger integration. After a couple of
years of heavy emphasis on training and development, the need for such sessions
declined, as people learned to know the new organisation and the new co-workers.
Hence, the focus switched towards compensation; succession planning and other more
routine HR activities. As several small acquisitions followed, one HR activity became to
support the acquisition process with various tasks.

Industrial relations are still on the agenda, thanks to the EWC in a quite visible
manner. However, with regards to HR resources the importance has declined.

HR Tango: We are part of cooperation organs both on a national level and a European level.
Immediately after n SierraTango was established we also established a EWC. Sierra had not been
involved in any of this, but Tango was familiar with the basics, as we had cooperation groups and
co-operation negotiations and so on, so we had an explicit dialogue with the personnel.

A distinguishing feature for the post-merger HR function came to be its involvement in

visionary work.

Management Tango: I think HR has to be part of the company vision formulation as the visions
are so closely linked to people. I’ m not saying that the HR function is the most essential thing in
an organisation. But I believe HR has an important role in being a visionary. Due to my advanced
age I have been around for a while and become more aware of long term issues.

The HR manager stressed his view on the HR function as a support function.

HR Tango: HR is a support function, which aims at helping the organisation reach its goals. A
support function cannot have its own visions; it’s a question of how to contribute so that the
corporation reaches its goals and visions. This leads to concrete action, such as building a
corporate culture and other stuff we have been busy doing.

The role of the HR function is inarguably more important after the merger than it was
before. At the time of the merger, HR had very little to do with the development of
organisation structures. After the merger, the expectations were that the HR function,
thanks to its expertise in leadership, should have opinions regarding how to structure
the company. The expectations go hand in hand with management group’s attitude
towards the HR function as a part of the management group; HR is not only regarded
as an executive function that what management tells it to do.

HR Tango: In the SierraTango deal HR was not present in the pre-merger planning, but since
then HR has been involved in both merger and acquisition planning. For instance I worked
 140

several months on a $20 billion deal. This shows that the importance of HR has increased during
the years.

When inviting HR to top management, the deputy CEO had a view on the support he
expected to get from HR. Nevertheless, he was surprised by the fact that HR did a lot
more than he had assumed and thus took a bigger role than the management group
realized they were giving HR.

Management Tango: The initial idea was to bring HR to HQ to support management in the
visionary and development work, to be a strategic partner in organisational design. Nevertheless,
the need to be operative and to educate and train people soon came up and thus the role of the
HR function swelled. I want to be frank about the fact that the HR function Erik [HR manager]
established grew much bigger and operative than I had ever thought.

HR Tango: The HR function has moved from being a function that “might be good to have” to
one of the most central functions within the group. That’s a tremendous development. Today
there is no question about it; HR has to be represented in the management group.

4.9.5. Analysis of case SierraTango

4.9.5.1. Sierra pre-merger HR roles

Sierra had a pre-merger HR function at HQ that catered for industrial relations, and
administration, hence the negotiating lawyer and process engineer roles appear to have
been present.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Process
Employee
Engineer
Advocate
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 28 The roles of the Sierra pre-merger HR function

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4.9.5.2. Sierra pre-merger influencing factors

The outer context. There are no self evident influencing factors. Within the outer
context referring to institutionalisation, perhaps there was an industry norm at the
time according to which HR was not given high priority. At least within Sierra this
seems to have been the case for quite a long time.

Organisational level. The above suggests that at least on an organisational level

administrative heritage might have affected the role outcome.

Individual level. Also, the individual features of the top managers including their
attitude towards HRM might have affected the structure and work of the HR function.

Table 40 Factors influencing the roles of the Sierra pre-merger HR function

The outer context x Other corporations

The inner context Organisational x Administrative heritage
Individual CEO / top x Attitude regarding HRM
management:

4.9.5.3. Tango pre-merger HR roles

The pre-merger situation of Tango very much resembled that of Sierra. The HRM
duties appear to have been the same, again focusing on administration and industrial
relations. However, there seemed to have been less formality within Tango, and this
directed my attention to the actual roles of the HR function. Although administration
and industrial relations were present within Tango it is not entirely sure they were very
visible in the HR function, as the HR function per se appears to have been quite
blurred. Hence, it is suggested that the negotiating lawyer and process engineer roles
are only partly identified.
 142

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Process
Employee
Engineer
Advocate
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 29 The roles of the Tango pre-merger HR function

4.9.5.4. Tango pre-merger influencing factors

The influencing factors of the Tango pre-merger HR function on the other hand are
argued to have been identical to those affecting Sierra, with the same underlying
arguments (see above).

Table 41 Factors influencing the roles of the Tango pre-merger HR function

The outer x Other corporations

context
The inner Organisational x Administrative heritage
context Individual CEO/top management: x Attitude regarding HRM

4.9.5.5. SierraTango post-merger HR roles

The post-integration HR function played a broader variety of roles than the pre-merger
functions once did. The process engineer and negotiating lawyer were still there,
although not as focal as they had been.

HR Tango: … Administration and industrial relations need to be taken care of before the function
can move further to other tasks.

There had been a shift towards more strategic roles, i.e. as a business partner and
strategy implementer. Post-merger HR had a visible role in top management.
 143

Management Tango: I think HR has to be part of the company vision formulation as the visions
are so closely linked to people.

The only role that does not seem to be identified is that of the employee advocate.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee Process
Advocate Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 30 The roles of the SierraTango post-merger HR function

4.9.5.6. SierraTango post-merger influencing factors

There appears to be a high number of factors that might have influenced role
formulation. First there are several external factors that have had certain implications
on the HR function.

Outer context. Within the external factors technology seems to have had an
important influence on the changes in the role. Formerly, technology was a means of
competition. Because of increased technological know-how it has become much more
difficult to differentiate a business based on technology. As the competition within the
industry remained high, HRM had become more important.

Management Tango: …Previously we competed with the machines we had built in the factory and
we would not show the competitor how our machine was built. Today everyone has the same
machines as no-one can afford having bad ones. The competition is about management skills,
about how to run the company. Therefore the role of the HR function has changed.

HR Tango: The true competitiveness and competitive advantages derive from the people and
how well motivated they are. That’s it.
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Since employers feared a future lack of competent people to recruit demography was
another external influencing factor. Competition for employees was expected to
intensify during the years to come, and this certainly had an effect on the work HR did.

Management Tango: The Finnish demographic development is such that employers fear future
competition for competent people. The attitudes of the management group towards future labour
are important. The heart of the matter is about selling the organisation and its way of working.
We therefore need a visionary HR function that looks around the corner.

Based on the argument above, it seems as if the demographics would lead the HR
function to take a more strategically important role.

The way in which the economic cycle affects the HR function appears to be ambiguous.
The fact that the merger took place during a period of economic growth appears to have
had a positive impact on the merger.

HR Tango: The business situation definitely affects HR’s work. We were very fortunate to
experience a boom straight after the merger. Hence, we were not forced to make people
redundant, instead we immediately focused on development, and that was a direct effect of the
positive business situation. The business situation is actually the single most important HR
determinant as it’s the business that creates the needs that steer the HR work. However, the
situation does not affect the role played by HR, but the activities undertaken; it changes the
content. HR can for example remain a business partner to line regardless of whether the
company is expanding or shrinking.

Hence, the economic situation appears to have influenced the activities of the HR
function. However, it appears not to have affected the role description. The belief of the
deputy CEO is that the HR function should be working on a long-term basis; the
business situation should not affect its work.

Management Tango: In a cyclical industry as ours, HR can be moving very fast from recruitment
to layoffs, if it lacks a long-term vision. HR should be able to live with the changes and in the
ideal case HR would spread the feeling of stability, motivating people regardless of the economic
cycle.

Organisational level. The business situation is not only a consequence of the

external economic environment, but also an intra-organisational factor like the
financial situation. Hence, the latter one could also be considered influencing factors.

Also, the business strategy appears to have affected HR.

Management Tango: When a merger takes place you are forced to think long-term; it’s not about
the next quarter, it’s about the next ten to fifteen years. Previously it was sufficient to serve the
client. Today you need to keep your personnel motivated. In these issues I believe a well
structured HR function has a very clear task

Management Tango: As long as HR stands for Human Resources it is a long-term thing. Human
resources are not consumed in a year; they need to be regarded on longer terms.

Individual level. Furthermore, within the internal context, individual factors have
had an important impact on HR’s role. The fact that HR was brought to the HQ and the
management group was largely a person question in two respects. First, the deputy
CEO believed, due to his personal experience, that HR was an important function.
Second, the HR director to be held the competencies and experience that management
thought was needed at HQ.
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As stated earlier, the pre-merger HR roles within the merging organisations were not
very elaborate. The post-merger expectations grew much higher, and hence, in
accordance with role theory the role also became much more important.

Management Tango: The expectations of HR about having a role in the structuring of

organisational models is much higher today than previously. An important reason is that HR has
systematically collected information about people through for instance performance appraisal,
and is very aware of the employee situation and is thus likely to have an opinion on how to
organize them.

The CEO has an important role in the formulation of the HR function. The deputy CEO
stated for instance that he believes HR has to be part of the company vision
formulation as the visions are so closely linked to people, and that HR should not only
be and advisor, it should be a partner. This suggests a firm belief in the HR function.
Several quotes verify the importance of the top management’s perception of the HR
function.

HR Tango: He [the deputy CEO] is the one who decided that we needed HR at HQ and in the
management group.

HR Tango: It’s difficult for HR to achieve a bigger role if the CEO does not acknowledge that the
business is run by people, and that the organisation needs a structure which gives people the
possibility and freedom to work. It’s actually the CEO who needs to be the best HR director in the
company, and he then needs an HR manager to be his right hand.

Management Tango: Much is dependent on the CEO’s attitudes and ambitions and also his co-
workers. But the attitudes and opinions change as people develop and experience new things.
The feeling within the management group is that HR issues become more and more important,
maybe because it is through people we reach competitive advantage and the recruitment of
competent people is much more difficult today than before. But not everyone does acknowledge
that yet.

Management Tango: My experience made me suggest that HR should be present at HQ. Prior to
the merger, I perceived that I was myself fostering for HRM at HQ, but as we merged the
organisation became so big I felt I needed someone else to help me out.

HR Tango: It was a natural development to bring HR to HQ. I don’t think there was one obvious
reason, it was just regarded as a matter of course as the world had changed and developed. In
combination with the integration, it was easy to include a new HR box.

Hence the mindset of the top management and especially the attitude towards HRM
played an important role. The personal traits of the HR manager were potentially the
single most important reason for the HR function taking such an important role within
the management group.

HR Tango: I believe I was appointed HR director because my experience from both HR and line.
The HR function can produce millions of tools and processes without adding any value to the
business if they do not understand the business goals.

Management Tango: … I want to be frank about the fact that the HR function Erik [HR manager]
established grew much bigger and operative than I had ever thought.

Merger context. Additionally, the merger per se appears to have had an impact on
the HR function. First, it implied sudden growth, which put certain demands on people
management, and second, this led to changes in structures which also affected HR.

HR Tango: The merger has definitely affected the HR role, because the company grew so big. The
size in itself is an influencing factor, as it puts demands on the rules of the game. Especially when
searching for synergies.
 146

HR Tango: The need to coordinate the business grows when a company grows. In both pre-
merger organisations, the need to do so had already become a hot topic, and some initial steps
were taken to create a united HR function in pre-merger Sierra. Hence the merger immediately
forced the organisation to do what would otherwise have been done in the separate organisations
sooner or later.

Table 42 Factors influencing the roles of the SierraTango post-merger HR function

The outer context x Demography

x Economic cycle
x Technological development
The inner context Organisational x Business strategy
x Financial situation
Individual CEO / x Attitude regarding
top management: HRM
HR professionals: x Competence
x Reputational
effectiveness
The merger x Changes in organisational structure
context
x Sudden growth
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4.10. Uniform and Victor merge to become UniVic

The description and analysis of the current case is based on data from two in-depth
interviews and a number of annual reports. One of the respondents was the post-
merger corporate head of HR. Prior to the deal she had held the position as corporate
head of HR at Uniform (hereinafter HR Uniform). She had been working within the
organisation for four years when the deal took place. Prior to the merger the other
respondent was HR manager at Victor, and became the post-merger HR manager of
one of the merged organisation’s largest business unit (HR Victor). Like the first
interviewee, the other also possessed four years of experience from the pre-merger
organisation.

UniVic was formed as a result of the merger between Sweden's Uniform and Finland’s
Victor. Through the merger, a world-wide leading service provider was created and the
expectations were that the merger would, through operational efficiencies and the
implementation of Uniform’s technology at Victor, create substantial cost savings and
hence higher returns for shareholders (press release).

In financial terms it was an acquisition in which Uniform offered Victor shareholders

newly issued shares in Uniform. But the respondents perceived the deal as a merger of
equals.

HR Uniform: We always stated that this is an equal relation, it’s a marriage. There is neither
acquirer nor aquiree, although Uniform purchased Victor.

HR Victor: Together we build a new entity which is stronger than the two former separate ones.

Table 43 Milestones of the UniVic merger

Date Event
Day 1 Signing of the deal
1-3 months Cultural training
3 months Deal completed, new CEO appointed internally
20 months Integration complete – restructurings continue

4.10.1. Uniform’s pre-integration HR function

A couple of years before the merger the HR function of Uniform had gone through
substantial changes. The head of HR was changed four years prior to the merger,
during a time when the economy was growing. Recruitment was the single most
important and time-consuming HR activity at the time. Harder times soon followed.
First resources were released from recruitment and the HR function shifted its focus to
the overall structure and processes of the function. Next, important cost cutting hit the
organisation, forcing the HR function to reorganize and to reduce the number of
employees.

HR Uniform: Globally, we were forced to fire every fourth employee. That implied a huge focus
on HR.

Hence, prior to the merger, the pre-merger HR function had been forced to emphasise
cost efficiency. Also, the HR function had been streamlined and centralised, for
example, by replacing HR professionals.
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HR Uniform: During the years that preceded the merger we worked extensively with our role
formulation. Within the function, the views on HR varied tremendously and we had to decide
whether we wanted to make coffee and organise Christmas parties or whether we wanted to
contribute to the business. Several HR professionals needed to be replaced.

The HR function included the payroll and was centralised, which implied that all HR
specialists reported to the head of HR at HQ instead of to line managers.

4.10.2. Victor’s pre-integration HR function

The HR function of Victor was foremost perceived to be a support function.

HR Victor: HR is a support function, it supports the business. You always need to know what the
current top priority is to focus on.

The HR manger reported to the head of legal affairs, who was a member of the top
management team, and hence represented HR in the management group. The HR staff
consisted of four HR professionals.

Moreover, the HR function was perceived to have a consultative role, which implied
that the management group was the decision-making body, while HR created the
processes. Being a support function was not viewed as contemptible; rather it was
regarded to call for flexibility as HR had to adjust to the business situation. , the HR
function was reported to have had an active role, to try to predict the future rather than
react to it.

HR Victor: HR is a consultant, a supporter and an activator.

4.10.3. Integration

The HR manager of the acquiring firm became involved in the pre-merger due diligence
to have a close look at the compensation and benefit schemes and the employment
contracts of the aquiree. Cultural aspects and leadership issues were not on the DD
agenda. Also, Victor’s HR manager became involved in the pre-merger planning shortly
before the signing of the deal, to prepare practical details regarding the announcement
to the personnel and initial integration.

Within the integration the HR function had two duties. One was to support the line
managers with common processes and the other to look at the HR function and find the
synergies within. During the first month, after the signing, before the deal was even
complete, the HR function arranged cultural training for all of the personnel.

The two HR functions needed to be integrated with each other. The two former HR
directors jointly decided to present their existing HR activities, including processes and
procedures and together to decide what the future joint practices would be.

HR Victor: Either one party has to adapt to the other party’s policies and procedures or then both
parties together create something new. Creating something new calls for a lot of time and effort.
We have genuinely got to know each other and tried to find the best parts.

The choice of working together was a step in the process of uniting the organisations
and profiting from the synergies.
 149

HR Uniform: Looking back, it was a very good process, a project well managed, in an extremely
short period of time.

4.10.4. Post-integration

The post-integration HR function is not simply a sum of different processes from

Uniform and Victor, it is a new entity that has been created based on the knowledge
and experience of the two HR functions.

The post-merger HR function consisted of HR managers within the business divisions

and a number of HR specialists and two HR administrators at HQ. The specialists are
concerned with management development, competence development, compensation
and benefits and also international assignments. Also, work welfare is mentioned as an
everyday HR matter. The work is reported to be highly supportive, as managers are
assessed and coaching is offered, but there is constantly an aspiration of looking
forward, of contributing more with fewer resources. The ambition is to create even
more efficient processes, to work more intelligently, and to understand the business
even better.

HR Uniform: It’s very much about our way of working, our competence. We still need to boost
the competence within certain HR areas.

The head of HR is member of the broadened management group. Her time is mainly
spent on compensation and benefits, leadership issues, management development and
employment contracts.

HR Uniform: Because of our heavy focus on compensation and benefits as well as on

management development I work very close to the CEO. He’s very engaged in these issues.

The post-merger HR function is reported to be more structured than the pre-merger

functions were, at the same time more is required from HR, and HR’s own ambitions
appear to have reached new levels.

HR Uniform: We want to reach further, add more to the business, with a strategic focus. During
an integration process you have to work through every aspect and argue for every choice you
make, you have to be sure you stand behind your words. Fortunately Victor’s HR manager was a
strong personality with similar thoughts. Hence the integration has been smooth.

HR Uniform: The biggest challenge is to deliver high quality with fewer resources, to meet
management’s expectations. If we do not deliver there is no value added.

HR Uniform: We have come far; we have a more explicit HR function, better cooperation within
the function. We have more common processes and the HR issues are getting increasing
attention. They have been highlighted during the merger. An HR function which invests in the
merger work can thus truly profit from the deal.

4.10.5. Analysis of case UniVic

4.10.5.1. Uniform pre-merger HR roles

Uniform’s pre-merger HR function emphasised efficiency and business support. The

apparent evidence of the different roles played is scarce. Nothing really seems to
indicate business partner, employee advocate or negotiating lawyer roles. It appears as
 150

if HR catered for administrative processes, which made it a process engineer, and also
for support with regards to strategically important tasks, which made it a strategy
implementer.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Process
Advocate
Engineer

Negotiating
Lawyer
Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 31 The roles of the Uniform pre-merger HR function

4.10.5.2. Uniform pre-merger influencing factor

Outer context. The business situation had drastically changed prior to the merger,
forcing the organisation, including the HR function, to seek cost efficiency. Hence, it is
argued that within the outer context, the economic cycle had an impact as the
organisation was affected by the economic slowdown.

Inner context. Within the inner context, the financial situation was poor. Also, there
had been not only the head of HR but also other HR specialists had been replaced,
specifically with the aim n of getting more ambitious HR professionals onboard.

Table 44 Factors influencing the roles of the Uniform pre-merger HR function

The outer x Economic cycle

context
The inner Organisational x Financial situation
context Individual HR professionals: x Competence
 151

4.10.5.3. Victor pre-merger HR roles

Victor’s pre-merger HR function appears to have resembled Uniform’s. There is no

actual data on the individual activities undertaken within Victor’s pre-merger function.
Hence the assumption made is based on the statements by the respondents which
indicate that there were very few differences between the functions.

Strategic

Business Strategy
Partner Implemente
r

Proactive Reactive

Employee Process
Advocate Engineer

Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 32 The roles of the Victor pre-merger HR function

4.10.5.4. Victor pre-merger influencing factors

The HR manager perceived the four most important influencing factors to be company
history, business situation, managers and the HR function. Also she argued that her job
was affected by the fact that the employees were mainly highly educated and young
professionals, who, according to the respondent, think with their own minds.

Outer context. The economic environment might have been an influencing factor in
the outer context.

Organisational level. From the inner context, factors on an organisational level that
might have affected the HR function are the administrative heritage, referred to as
history by the respondent, type of workforce as well as financial situation.

Individual level. On an individual level both managers and HR professionals were

perceived to be potential influencing factors.
 152

Table 45 Factors influencing the roles of the Victor pre-merger HR function

The outer context x Economic cycle

The inner context Organisational x Administrative heritage
x Financial situation
x Type of workforce (white collar)
Individual CEO/ top x Attitude regarding
management: HRM
HR professionals: x Competence

4.10.5.5. UniVic post-merger HR roles

The post-merger HR function had reached a more sophisticated level than the pre-
merger functions had. The process engineer and the strategy implementer were still
alive, however also accompanied by the business partner role.

HR Uniform: We [HR] are absolutely involved in critical strategic business discussions, arguing
for and against different solutions and their possible implications, before the final decisions are
made by top management. Having said that we will always take care of basic HR administration
as well.

Strategic

Business Strategy
Partner Implemente
r

Proactive Reactive

Employee Process
Advocate Engineer
Negotiating
Lawyer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 33 The roles of the UniVic post-merger HR function

 153

4.10.5.6. UniVic post-merger influencing factors

Merger context. The merger context appears to have had an impact on the role
formulation of the HR function. The post-merger organisation became more global
than the two pre-merger organisations had been, but also there were changes in
structure which lead to increased co-operation across borders.

Also, the merger made the people dimension topical, as it became evident to managers
that the organisation would not survive without its employees.

HR Uniform: If the employees do not join in, if they do not deliver and if they lack motivation, it
does not matter that we get married and think we are big and beautiful. We need to have the
support of the personnel, and that’s why HR is extremely important.

Furthermore, the merger implied hard work for the HR function, which, as it appears
to have been handled neatly, potentially increased the credibility of the HR manager.

HR Uniform: One has to work pro-actively and identify the critical issues. During a merger
everything is important, but what is truly critical the first three months? Prioritise and commit to
what you are doing in order to support the business. At the same time you need to build your new
HR function, because when the first three months are over, it’s business as usual and HR has to
deliver.

The increased degree of internationalisation seems to have put new demands on HR. It
was argued that a domestic organisation would be much easier to manage than an
international one, and that therefore managers in increasing numbers were asking for
HR’s help, as the business divisions had been reorganised to cover several countries
and the line managers needed to cope with the international dimension.

HR Uniform: It was dead easy to manage something nationally. Nowadays a line manager can be
responsible for operations in several countries. Suddenly everyone is not working under the
same roof, and the manager needs to take into consideration how different decisions might affect
the employees in Australia or the UK. It’s a different way of thinking; a different kind of
leadership is needed. And that’s where HR issues are raised. HR has been given a more explicit
role, an important role.

Individual level. On an individual level, the traits of the HR manager appear to have
been the perhaps single most important factor influencing HR’s role.

HR Uniform: I have earned my place, I worked day and night for one year. That was an
investment I made, now I am harvesting. As I am now a co-player I have the possibility to focus
on the right questions. I have earned the trust of the CEO.

Also, on an individual level, the attitude of the CEO and other top managers makes a
difference. The HR manager succeeded in earning their trust. The fact that the CEO
perceived the importance of compensation and benefits and also of management
development might suggest an initially positive attitude towards HRM.

Table 46 Factors influencing the roles of the UniVic post-merger HR function

The inner Individual CEO/top management: x Attitude regarding HRM

context HR professionals: x Competence
x Reputational
effectiveness
The merger x Changes in organisational structure
context x Increased internationalisation
 154

4.11. Four organisations that lack merger experience

This section discusses and analyses four case organisations which are referred to as
matching cases or non-mergers. These organisations resemble the merger cases with
respect to industry, nationality and size, but growth has been mainly organic or based
on smaller acquisitions (For a further discussion on the methodological choice see
section 3.1.2).

The section is divided into four, so that each part discusses one particular non-merger.
The non-mergers are also discussed and analysed at two different points of time. First,
an early stage, i.e. corresponding to a situation 5-10 years in the past, and, second, a
current state, which refers to the time when the data were collected, is presented. The
early stage corresponds to the pre-merger state while the current state is comparable
to the post-merger analysis. Nevertheless, the data available on the early stage have
been scarce because the HR managers of the early stage were not available for
interviews. Hence, understanding of the early stage is not as thorough as it is in the HR
functions of the merger cases. As the thesis nevertheless possessed a certain level of
understanding of the early stages it was decided to make it explicit in the report as it
adds to the complete understanding of the development of HR functions in general.

The structure of this section largely follows the structure used when describing the
merger cases. First, the background is described, then the roles are analysed and finally
some influencing factors are suggested.

4.11.1. Whiskey’s HR function

The description and analysis of the current case, Whiskey, is based on data from an in-
depth interview with the HR manager of the company (HR Whiskey). Whiskey is a
Finnish product and service provider. It is today listed on the stock exchange, but the
largest shareholder is still the founder family.

Table 47 Milestones of the Whiskey case organisation during the studied decade

Date Event
Years 1-5 Growth through small acquisitions.
Year 5 New CEO appointed internally
Years 5-10 Financial crisis. Restructurings, centralisation,
production units shot down.

The head of HR held a PhD in engineering and had initially been recruited to Whiskey
as vice president, business development. Soon she was moved to the HR function
although she possessed no experience of HRM. At the time of the interview, she had
been working as HR manager for four years.

HR Whiskey: In many organisations line managers have been moved to the HR function. It’s not
unusual to find someone with a background in engineering as HR manager. The number of
lawyer’s in the HR function has decreased, because today HRM is much about budgets and
business, while the time spent on industrial relations and employment contracts has decreased.
Also within a global organisation a Finnish law degree won’t take you very far, as you’re not a
specialist on the other side of the border.
 155

The HR function at Whiskey used to be highly decentralized. Each and every country
managed HR in its own way and within Finland HR was managed differently at
different locations and production units. There was no co-ordinated activity, no-one
controlled salaries and salary increases, and line managers were given all responsibility.

The number of employees varied, as small acquisitions were made while other lines of
business were sold off. At an average there was however constantly more than 10.000
employees.

The level of compensation and benefits varied, but in general employees were well
rewarded. There was a long tradition of being generous; it was a family run company,
and there was always a desire to take good care of the employees. As the organisation
grew, it became global and was listed on the stock exchanges the expectations held on
the organisation shifted.

HR Whiskey: The Finnish family business mentality does not necessary work in a global context.
Line managers began taking advantage of the generosity.

Whiskey was soon hit with financial problems. Cost saving was emphasised and several
production units had to be closed down. It was a severe and complete organisational
change. Thousands of people were made redundant.

HR Whiskey: To be straight, you cannot fire without making other cost savings. You cannot raise
other employees’ salaries while you let some go. Thus, the financial crisis was for the HR function
a time when the policies had to be made more precise, and controlled centrally.

The changes were not easy to make. Although top management was behind the savings,
line managers worldwide had become used to Whiskey’s HQ not interfering, and hence
the HR manager encountered resistance.

HR Whiskey: The shape-up was challenging. The discussions with line managers were fierce, and
they had to be forced to the changes. It was all worthwhile; today the company is doing fine.

The HR manager was not a member of the top management team, which has in
Whiskey traditionally been kept very small with close, rather informal relations. The
role of the HR function grew important as people were made redundant and the HR
manager was regularly approached by management.

Important HR activities were compensation and benefits and also organisational

restructuring. Little time was also spent on training issues, while recruitment was
minimised. Instead, in addition to the large layoffs certain managers were made
redundant, implying hard work for the HR function.

4.11.1.1. Whiskey early HR roles

In the early days The HR function was characterised by a high degree of

decentralisation, and no particularly strategic activities were reported to be on the
agenda. It seems that the foremost role played by the HR function was the process
engineer. To which extent the negotiating lawyer was present is hard to tell. There is no
actual evidence of the role, but it appears as if Finnish traditional HR functions
generally play the role of both negotiating lawyer and the process engineer.
 156

Strategic

Business Strategy
Partner Implemente
r

Proactive Reactive

Employee Process
Advocate Engineer
Negotiating
Lawyer
?
Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 34 The roles of the early Whiskey HR function

4.11.1.2. Whiskey early influencing factors

Organisational level. At the early stage, there was not much of an HR function. The
main factors having influenced the role seems to be the business strategy and the
administrative heritage. Having a decentralized function was something the
organisation had got used to. The fact that the financial situation was good and the
company was family-owned increased the degrees of freedom.

Table 48 Factors influencing the roles of the early Whiskey HR function

The inner Organisational x Administrative heritage

context
x Business strategy
x Financial situation
x Ownership

4.11.1.3. Whiskey current HR roles

The role of the HR function became more strategically important. At the current stage,
a strategy implementer was identified in addition to the process engineer role, and the
negotiating lawyer role was also verified.
 157

Strategic

Business
Strategy
Partner
Implementer

Proactive Reactive

Employee
Process
Advocate
Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 35 The roles of the current Whiskey HR function

4.11.1.4. Whiskey current influencing factors

The business situation appears to have forced the HR function to streamline its
processes, which in turn led to a more visible HR function, as HQ HR centralised the
HR procedures. Also the business situation lead to serious layoffs which also made the
HR function central.

Outer context. The economic cycle seems thus to have influenced the HR function
from an outer context.

Organisational level. Within the inner context, an organisational factor that appears
to have influenced the roles was the financial situation. The changes in ownership
structure, the growth and the increased internationalisation were other organisational
factors that affected role formulation.

Individual level. On an individual level, the input of top management seems to be

moderate – they do not appear to have had a major stake in HR’s role formulation. The
competence of the HR manager might on the other hand have been crucial as she, with
her extensive line experience f, cut costs effectively. Previously salary expenses had
soared.
 158

Table 49 Factors influencing the roles of the current Whiskey HR function

The outer x Economic cycle

context
The inner Organisational x Degree of internationalisation
context x Financial situation
x Ownership
Individual HR professionals: x Competence
x Reputational effectiveness

4.11.2. X-ray’s HR function

The description and analysis of the current case, X-ray, is based on data from an in-
depth interview with the HR manager of the company (HR X-ray). X-ray is a Finnish
service provider with operations in several countries. It is owned by the government,
and aims at financial profitability.

Table 50 Milestones of the X-ray case organisation during the studied decade

Date Event
Year 1 New CEO and first HR director appointed
Organisational restructuring including reformulation
of company strategy
Years 3-4 Restructuring of HR function

The head of HR had an MBA and some twenty years of experience from line
management and five years from HRM within another, privately owned service
provider. At the time of the interview, she had been working as HR manager within X-
ray for four years. Before she joined the organisation, there was no actual head of HR,
whereas the deputy CEO was responsible for HRM. The current head of HR became a
member of the expanded management group as soon as she joined the firm.

X-ray had been experiencing a decline in demand of its services and products. Due to
technological innovations, the current business had been decreasing and there had
been an explicit need to sharpen the business focus. A new strategy was launched and
the whole organisation needed to be reorganized in order to be able to support the new
business goal. Several business units were sold as they did not represent core activities
according to the new strategy. Other small acquisitions were made.

Prior to these changes, the HR function was undefined. Some parts of it were clear,
such as industrial relations and management development. Also, employee surveys
were made, training was offered and employee welfare including healthcare was
catered for. Otherwise it was a mishmash of separate issues.

HR X-ray: HR took care of various issues that had for some reason lapsed to HR.
 159

The number of HR staff in the various business units varied from zero to several, and
they lived a life separate from HQ. Centrally there was a corporate service provider,
which took care of the payroll, travel expenses and so forth, employing some 40 people.

As a consequence of the corporate restructurings the HR function was also

restructured. An analysis of the current state made the HR manager realize there was
lots of overlapping within the function, things were taken care of in an inconsistent
manner, there were duties that no-one was responsible for, and important issues which
should have been dealt with systematically were forgotten about.

HR X-ray: Our organisation [the HR function] did in no ways support the unification of
processes, the efficiency, the systematizing nor the strategic thinking of the company. That’s why
we suggested that a centralized HR function would be built.

Today it embraces six basic HR-processes, which are believed to be the crucial ones.
These are change management; employee wellbeing; performance management;
training and development; employment conditions; and payroll and record keeping.

HR X-ray: The new CEO began searching for a united determination in order to separate the
organisation from having a collection of detached strategies as company strategy.

The HR function, lead by the HR manager, decided on how to organise the HR

function, and sat up a number of intra-functional goals in order for the function to
make sure that it will be able to support the business strategy. The CEO gave the HR
manager his support by emphasising the value of HR activities.

The HR manager argued that the presence of HR in top management makes it easier
for HR to support the business. Within X-ray, all HR managers at divisional level
except for one, were also members of the divisional management group. At the time of
the interview, the HR function was experiencing the most problems in the division
where HR had not a seat at the table. The line manager of that division was being made
redundant and the aspiration was to recruit a new line manager who would value the
HR function more highly.

HR X-ray: He [the current line manager] did not see any value added in having HR in the
management group. We [HR] experience a lot of problems in that particular division because the
management group never knows what to do. It is impossible for us [HR] to know the preferences
and emphasis of the management group, what are their possible problem areas. Although our
HR staff tried to ask management’s priorities, training needs and their expectations for HR, the
fact that HR is not present in the meetings listening to the discussion registering what is said
shows clearly at our end. As the line manager will be replaced, we are hoping that HR will
become a member of the management group.

It is expected that long-term HR planning will be a future challenge.

HR X-ray: I feel HR issues are prioritized well enough in our organisation. The value of HR is
understood.

The ways in which the HR function works together with top management to support
business strategy suggest that the HR function is to a large extent a strategy
implementer and also to some extent a business partner. In addition, the HR function
caters for the process engineer role.
 160

4.11.2.1. X-ray early HR roles

The early HR function of X–ray was perceived to be decentralised, scattered, with tasks
related to administrative and industrial relations. The roles partly identified were thus
those of process engineer and negotiating lawyer.

Strategic

Business Strategy
Partner Implemente
r

Proactive Reactive

Employee Process
Advocate Engineer
Negotiating
Lawyer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 36 The roles of the early X-ray HR function

4.11.2.2. X-ray early influencing factors

Organisational level. The lack of focus appears to have affected the role, thus I
regard the (lack) of business strategy to be an influencing factor. Also the
administrative heritage is likely to have had a certain impact on the role. The fact that
the organisation was owned by the state can be regarded to add to the particular
administrative heritage that was affecting the whole organisation.

Table 51 Factors influencing the roles of the early X-ray HR function

The inner Organisational x Administrative heritage

context
x Business strategy
x Ownership
 161

4.11.2.3. X-ray current HR roles

The role of the HR function became more focused and strategically important. At the
current stage, a strategy implementer was identified in addition to the process engineer
role. Also the business partner was partly identified.

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Process
Advocate
Engineer
Negotiating
Lawyer

Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 37 The roles of the current X-ray HR function

4.11.2.4. X-ray current influencing factors

Outer context. Factors within the outer context, such as increased competition (i.e.
the doings of other corporations), changes in consumer behaviour and technological
innovations, forced the organisation to rethink its strategy. The changes in consumer
behaviour can be traced to the technological development.

Organisational level. The inner context reacted to the changes within the outer
context, hence the business strategy was changed according to the outer pressures and
also the structure of the organisation was changed. These changes in turn influenced
the HR function to restructure itself.

Individual level. Prior to the restructuring, a new CEO had been appointed, with a
mandate to find a new business focus and to lead the organisation through the
restructurings. The attitude of the new CEO regarding HRM differed from the view of
his predecessor. Also, the HR director had been replaced at the same time, and it
appears as if the new HR director was competent and had the will to perform, which
was new to the organisation.
 162

Table 52 Factors influencing the roles of the current X-ray HR function

The outer x Technological development

context
x Other corporations
The inner Organisational x Structure of organisation
context
x Business strategy
Individual CEO / top management: x Attitude regarding
HRM
HR professionals: x Competence

4.11.3. Yankee’s HR function

The description and analysis of the current case, Yankee, is based on data from an in-
depth interview with the HR manager of the company (HR Yankee). Yankee is a
Finnish product and service provider with operations in a number of countries. It is
privately owned, with long traditions of providing high quality to customers.

Table 53 Milestones of the Yankee case organisation during the studied decade

Date Event
Year 1 New CEO appointed
Year 3 New HR director appointed
Sharpening of HR function

Yankee had experienced a number of CEOs within only a few years. Finally the firm
succeeded in hiring a CEO with whom the board of directors was pleased. The CEO
started to revise some managerial procedures and for example employed an HR
director who also became a member of the top management team.

The newly appointed HR director held vast experience of the field of HRM, having
worked as HR manager within various organisations during the last two decades.
During the seven most recent years he had been working within Nokia as HR manager
in different business units.

The HR director explained the changes that had been taking place within Yankee’s HR
function since he entered the organisation:

HR Yankee: Yankee has lacked proper tools, there have been no united processes, and the
activities of the HR function have been mainly administrative. During the past few years we have
started a management development project, management assessment, and we are introducing an
IT tool for HR. By doing this, we try to find ways of supporting line managers more efficiently.

Furthermore he argued that the co-operation within the organisation across borders
and business units has increased thanks to his attempts to centralise some of the HR
processes and procedures.

The number of HR professionals / employee is 1:300, which is perceived to be relatively

low. That number did not change significantly during the years when the HR function
was reformed. However, the resources are gradually being moved from HR
administration such as payroll to more strategic duties.
 163

HR Yankee: We are looking for synergies within the HR function by centralising HR

administration, which has so far been managed separately within each and every business unit.

The urge to centralise some activities in order to gain from synergies does not concern
HR alone. The new CEO has systematically moved away from the holding structure
which characterized the organisation when he joined, to have a more joint business
management across business units.

HR Yankee: The strategic thinking within Yankee has changed during the last years since the
new CEO was appointed. Yankee has grown big enough to be in need of more structure to gain
cost efficiency. The owners have appointed a CEO who protects their interests.

There are four key HR areas that take approximately a quarter of the HR resources
each. One issue is the succession planning and management training, another is the
introduction of the IT tool which will centralize the HR administration and make it
more efficient, the third is management compensation and benefits and the fourth is
employee motivation. The HR manager regards his position in the management group
as a prerequisite for doing his job.

HR Yankee: Our most important assets are human beings. Taking care of training and ensuring a
certain level of the service we provide is a question for the management group. In such a service
business, HR needs to be part of the management group, because that’s where the decisions are
made.

The HR manager further argues that the decision made by the CEO to have HR in the
management group is likely to be a consequence of the increased competition for
employees.

HR Yankee: We cannot fulfil our business strategy if we do not have employees, or if our
employees do not have the knowledge needed and are not motivated, or are not retained within
the company.

The aim of the HR function is for the organisation to be regarded an attractive

employer, and to be able to train and develop the employees. The future challenge is
regarded to be to find employees.

4.11.3.1. Yankee early HR roles

Yankee HR function used to be decentralised and administrative. Hence, it is argued

that the most central role was that of process engineer role. The negotiating lawyer role
might also have been present, as it often is in traditional Finnish personnel functions,
although the study lacks concrete evidence of such a role.
 164

Strategic

Business Strategy
Partner Implemente
r

Proactive Reactive

Employee Process
Advocate Engineer
Negotiating
Lawyer
?
Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 38 The roles of the early Yankee HR function

4.11.3.2. Yankee early influencing factors

Organisational level. The factors identified that seem to have influenced the role are
organisational. It appears as if the administrative heritage has made sure that business
is run as usual. To have a decentralized HR function was part of the business strategy,
and apparently the decentralization also led to inefficiency concerning administrative
tasks.

Table 54 Factors influencing the roles of the early Yankee HR function

The inner Organisational x Administrative heritage

context
x Business strategy

4.11.3.3. Yankee current HR roles

The current state of Yankee was still very much involved with HR administration,
having an important process engineer role. More and more the function was moving
towards strategic tasks, already being a strategy implementer, and gaining ground
regarding the business partner role.
 165

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Advocate Process
Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 39 The roles of the current Yankee HR function

4.11.3.4. Yankee current influencing factors

The factors that have influenced the role formulation of Yankee HR function appear to
be found within the inner context.

Organisational level. The organisation had grown, and this growth placed new
demands on its structure and to some extent on the business strategy as well.

Individual level. Furthermore, there was a new CEO, who was in favour of having
HR in the management group. Also a new HR manager had been appointed; someone
with considerable competence and the will to improve the function. Se was also given a
mandate to influence top management work by the CEO.

Table 55 Factors influencing the roles of the current Yankee HR function

The inner Organisational x Organisational growth

context
x Organisational structure
x Business strategy
Individual CEO / x Attitude regarding HRM
top management:
HR professionals: x Competence
x Reputational
effectiveness
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4.11.4. Zulu’s HR function

The description and analysis of the current case, Zulu, is based on data from an in-
depth interview with the CEO of the company (management Zulu). Zulu is a Finnish
family-owned manufacturing company with operations in a number of countries.

Table 56 Milestones of the Zulu case organisation during the studied decade

Date Event
Year 1 New head quarter established
Year 9 New CEO appointed internally

Zulu is an organisation consisting of three independent business divisions. The

philosophy is to let the divisions be independent of the HQ, although with a high level
of co-operation across the divisions.

At HQ there is no HR manager or HR function. However, the HR managers of the

business divisions are members of each divisional management team, and together the
HR managers constitute an HR team which meets regularly, having a rotating chair.

Management Zulu: The HR professionals need to be involved in the strategy work, in every single
division and production unit. There is an HR professional in the management group. They are
deeply involved in the business.

Competence development, safety, the development of best practices, and compensation

are activities that are stressed. The organisation wants to take good care of its rising
stars and make sure each and every one returns home safely at the end of every working
shift. The compensation is argued to be complex, and hence the whole compensation
process is catered for in-house. Industrial relations do not seem to be a high priority.

Management Zulu: One often hears old-fashioned HR managers arguing that one needs to take
legislation into account; that one cannot do this and that – and I say that’s bull shit. Every
country has its laws and paragraphs and working hours, but if you find a best practice it is
possible to rethink. It is possible to rethink.

4.11.4.1. Zulu early and current HR roles

The data on the current case derive from one interview with the CEO. Hence, the
viewpoint differs a bit compared to the other non-mergers where HR directors have
been interviewed.

The perception is that the role of Zulu HR function has not changed for a long time. The
interviewed CEO has been working within the organisation for a long time, with close
contacts to HR managers, especially in his former position as line manager.

Management Zulu: HR issues have always been close to my heart… I believe many organisations
have too narrow a view of human resources.

The identified roles of the early and current stages of Zulu are the same – specifically
the process engineer and the business partner – hence they are presented only once.
 167

Strategic

Business Strategy
Partner Implementer

Proactive Reactive

Employee
Process
Advocate
Engineer
Negotiating
Lawyer

Tactical
Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 40 The roles of the early and current Zulu HR function

4.11.4.2. Zulu early and current influencing factors

Organisational level. The strategic choice, to have a decentralised HR function,

seems to be an influencing factor. Changes do not seem to have appeared for a long
time, which suggests the traditions and the administrative heritage are strong.

Individual level. The attitude of the CEO appears to be the single most important
factor that influences the HR function, and the business strategy concerning HR.

Management Zulu: I believe in a strongly decentralised organisation and I believe in strong -

operation between the decentralised units. I trust that the HR managers can handle their job
without a strong HR leader at HQ. I trust in the HR managers’ cooperation. Sometimes we win,
sometimes we lose.

Table 57 Factors influencing the roles of the early and current Zulu HR function

The inner Organisational x Administrative heritage

context
x Business strategy
Individual CEO / x Attitude regarding
top management: HRM

To summarise, within the three first non-mergers, i.e. Whiskey, X-ray and Yankee, a
restructuring of the HR function had recently taken place. Previously these
organisations had had decentralised and unstructured HR functions, mainly concerned
with personnel administration. As a consequence of the various changes that were
 168

taking place in the organisations, e.g. cost-cutting in Whiskey, strategy reformulation in

X-ray and change of HR manager in Yankee, the HR functions had recently undergone
changes, and consequently become more structured, centralised and efficient. The HR
function of the fourth non-merger Zulu had not experienced any larger changes. The
function was decentralised, but with structured co-operation across the business lines.
 169

5 CROSS-CASE ANALYSIS

This chapter analyses the changes that appear to have happened in the roles played by
the HR functions studied. Chapter four examined the individual case organisations,
giving an overview of the HR roles at two different points of time, pre- and post-
merger. The discussion is now taken further by a cross-case analysis, looking for
possible patterns in the roles played.

In this chapter, the three first sections (5.1-5.3) analyse and discuss role development
in the merger cases. The first describes at a general level the shifts that have occurred
concerning the roles played by the HR function. The second subchapter concentrates
on the factors that have influenced the changes, discussing the extent to which the
individual factors have been identified in this study. The third subchapter combines the
discussion in the two first sections. The five proposed roles are discussed one at a time,
together with the influencing factors identified, in an attempt to distinguish the factors
that affect each role.

Comparative analyses are presented in chapter 5.4. First, the differences in the roles
between the HR functions of Swedish and Finnish firms, including differences in
Finnish-Finnish mergers compared with Finnish-Swedish mergers are analysed.
Second, possible explanations for the differences between the HR functions in the
merger cases and those in the non-mergers are elaborated on. Chapter 5.5 discusses the
applicability of the theoretical framework presented in chapter 2, while the final
subchapter (5.6) presents a new model which emerged from the data.

5.1. HR roles

Based on the data sample it appears evident that the roles of the HR function change
over time. Only two cases out of ten (DeltaEcho and IndiaJuliet) appear to have the
same HR roles after the merger as they did before. These HR functions had, however,
experienced the role changes within the HR function shortly before the merger took
place. The next question that arises is how did the roles change? Is there a pattern in
the HR functions moving from one role or roles to others?

Strategy implementer. The data suggests some patterns. A general trend is the rise
in the frequency of appearance of strategic roles. It seems that the strategy
implementer role occurs much more frequently in post-merger organisations than in
pre-merger organisations. In the pre-merger organisations elements of the strategy
implementer role were identified in less than half of the cases, while the same role was
present in all post-merger cases. Interestingly, the role was clearly identified in two
cases only, while partly identified in the rest of the cases. The finding may suggest that
the strategy implementer role is – within the post-merger context - in its early stages,
that elements of it are found widely, but few HR functions have yet managed to
incorporate the entire role.

Process engineer. Another role is present in every single post-merger organisation -

the process engineer role. This is the most frequently appearing role throughout the
study. Among the pre-merger cases the process engineer is clearly identified in 15 cases
and partly identified in 3 cases out of a total of 18 pre-merger HR functions. The
importance of the role has remained fairly constant, as among the post-merger cases
 170

the role is clearly identified in 10 organisations and partly in one (out of a total of
eleven cases34).

As both the strategy implementer and the process engineer appear to be vividly present
in many of the cases, it suggests – according to the framework - that the HR functions
are reactive. The proactive side of the framework, i.e. including the business partner,
the employee advocate and the negotiating lawyer, is not identified as frequently as the
reactive roles are.

Negotiating lawyer. The visibility of the negotiating lawyer role seems to decrease
somewhat over time. In many pre-merger organisations, the negotiating lawyer role
was important. It was clearly identified in six (India, Juliet, Kilo, Papa, Quebec, and
Sierra) and partly identified in yet another six (Alpha, Bravo, Echo, Foxtrot, November
and Tango) out of a total of 1835 pre-merger HR functions. In the post-merger
organisation industrial relations appear to be less emphasised, as the negotiating
lawyer was clearly identified in only two post merger cases (India and Juliet), however
still partly identified in another six cases (Charlie, DeltaEcho, Hotel, KiloLima,
MikeNovember, and SierraTango) out of a total of 11.

Employee advocate. The employee advocacy role does not seem to appear
frequently, either before or after a merger. It was partly identified in two pre-merger
functions and partly in two post-merger functions. One of the case organisations that
had elements of en employee advocate in one of its pre-merger functions (i.e. Bravo)
lacked it in the post-merger function, while in another case organisation the employee
advocate role was identified in both one of the pre-merger functions (Echo) and the
post-merger organisation (DeltaEcho). Additionally one post-merger organisation
(QuebecRomeo) had features of the role although both of its pre-merger functions had
lacked any signs of it. Hence, the employee advocate seems to appear randomly, lacking
an apparent logic.

Business partner. The business partner role is likewise a rarity. The role was
identified in one pre-merger setting only (Bravo), and in three post-merger
organisations (clearly in KiloLima and SierraTango, and partly in UniVic).

In chapter 2.3.4 I referred to Hope Hailey et al.’s (2005) discussion on the difficulty of
combining organisation-focused roles with roles focusing on employees. This study
finds some evidence supporting that logic. Either employee advocate or the business
partner roles are found in nine situations which represent either a pre-/post-merger or
a non-merger case (Bravo, Echo, DeltaEcho, KiloLima, QuebecRomeo, SierraTango,
UniVic, X-ray and Yankee). Only in one of them (Bravo) were the two roles present at
the same time. Yet another change appears to be the increase of roles played by post-
merger HR functions compared to pre-merger HR functions. Based on my analysis it
appears that the median for pre-merger functions is two roles (more than 70% of the
studied pre-merger functions play two roles or less), while it is three for the post-
merger functions (more than 90% of studied post-merger functions play three roles or
more). Thus, according to my study there is a trend of HR functions becoming more
versatile. The finding reflects the pressure on the HR function to perform a wide variety
of HR roles – as called for by numerous scholars (e.g. Ulrich 1996; Ulrich and

34 Although the number of merger cases is ten, the post-mergers are eleven, because of the de-merger of
India and Juliet.
35 Although the number of merger cases is ten, the analysed pre-merger HR functions are not twenty but

eighteen, because, data on Delta pre-merger HR function was too scarce to analyse, and Oscar lacked an
HR function.
 171

Brockbank 2005a). On the one hand the changes might be the result of the HR staffs’
conscious work to develop the HR function, but on the other hand it might reflect one
of the vicious circles Legge noticed in 1978. Legge pointed out that there is an
uncertainty about which tasks and roles the HR function should focus on, leading HR
professionals to respond to every knock on the door. To visualize the changes discussed
above, summarizing models are presented below. The sizes of the circles vary in
accordance with the frequency (i.e. number of case organisations) in which the
different roles occur in the pre-merger and post-merger data. The bigger the circle the
more frequently the role has been identified. The grey-scaled colours are familiar from
chapter four, giving an overview of the extent (how clearly) to which the roles have been
identified. The numbers in parenthesis show the number of times a certain role has
been identified (either partly or clearly) in relation to the total number of analysed
cases.

Strategic

Strategy
Implementer
Business (7/19)
Partner
(1/19)

Proactive Reactive

Employee
Advocate
(2/19)

Process
Negotiating Engineer
Lawyer (18/19)
(12/19) Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 41 The frequency of roles in the pre-merger setting

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Strategic

Strategy
Implementer
Business (11/11)
Partner
(3/11)

Proactive Reactive

Employee
Advocate
(2/11)

Process
Negotiating Engineer
Lawyer (11/11)
(8/11)
Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 42 The frequency of roles in the post-merger setting

In order to simplify, the circles above were placed in their initial places according to the
theoretical framework. Nevertheless, the analysis suggests that the roles might be
placed elsewhere in the framework than in their originally prescribed locations within
the matrix. For instance, the negotiating lawyer role appears in certain cases to play a
more reactive than proactive role (e.g. Alpha; Charlie; KiloLima; Quebec), and quite a
strategic role in some others (Juliet; MikeNovember). The process engineer role does
not always seem to be entirely tactical and reactive (e.g. Bravo), nor does the employee
advocate always fit neatly into its prescribed proactive and tactical box (e.g. Echo;
QuebecRomeo). Nevertheless, the two strategic roles - the business partner and the
strategy implementer - have remained in their theoretical positions throughout this
study sample36. The placement of a certain HR role in a certain company may differ
from that in the framework. The reasons for this are the multi-faceted nature of HR
functions, the difficulty of defining HR roles and the fact that HR functions operate in
different contexts.

The complexity might also be a reflection of the divergent roles of the HR function.
Although a general pattern of HR functions becoming more strategic appears to be
found, a more detailed analysis suggests the HR function to be increasingly divergent.
(Truss, 2009). Despite the arguments and evidence of institutional isomorphism which
suggests an increased convergence between HR functions across companies in a social
field, my study finds the organisation-specific characteristics to have greater impact on
the HR function.

36 For a further discussion on the applicability of the framework see section 5.5
 173

To conclude, change indeed happens, but how revolutionary is it? The process engineer
remains the most vivid role, and the negotiating lawyer is identified in several pre- and
post-merger HR functions, as is the strategy implementer. The business partner and
the employee advocate roles continue to be rare. Previously scholars have found
conflicting evidence of the degree to which the HR function is changing its roles.
Brewster (1995) argues that the roles are stable, while Mabey et al. (2006) state that
change is taking place within the HR function. My study suggests that change does
occur within the HR function, but it does not appear to be very dramatic. Or the
potentially dramatic changes are at least not very fast, as the study covers no more than
ten years.

As potential barriers to change Guest and King (2004) note that top management does
not treat HR as a high priority, and the HR specialists do not succeed in identifying
priorities for improvement. I will return to this in section 5.6 where I discuss the
relationship between the expectations of top management and performance of the HR
function.

5.2. Influencing factors

In chapter 2, the possible influencing factors were divided in an outer context and an
inner context. Having analysed the case organisations it appears as if the inner context
has a much bigger impact on the roles played by the HR function than the outer
context, although elements from both contexts were identified. Previously, scholars
have drawn attention to the inner context, arguing that internal factors might help us to
understand the diversity of HR roles and practices. In their study on the HR function
Hope Hailey et al. (1997) found that internal factors such as organisational culture
dictate different HR practices and roles. It was argued that the affecting variables go
beyond the typical factors identified by the contingency model such as business life
cycle to an understanding of internal factors.

In this study, the inner context was divided into an organisational and an individual
level. The administrative heritage, which is part of the organisational level, seems to be
one of the single most important influencing factors. According to my study, equally
important factors are the attitude towards HRM held by the CEO and top management
and the competence of the HR director and HR professionals.

In addition to the influencing factors discussed in chapter two, other factors arise from
the data. Within the outer context demography and consumer behaviour were found to
affect the HR function. Within the inner context organisational factors that were not
mentioned in chapter two, but according to the data merit attention are organisational
(in)stability, type of workforce (i.e. blue or white collar), ownership and structure of the
organisation. An additional individual factor is the previous experience of the
CEO/management group. Two additional factors were also found within the merger
context, namely understanding of the other organisation and the other party’s attitude
towards learning.

In the sections below I discuss both the factors that were part of my conceptual
framework and those that emerged from the data.
 174

5.2.1. The outer context

Within the outer context, the four factors discussed in chapter two were identified, i.e.
the economic cycle, the impact of other corporations, the political and legal
environment, as well as technological development. In the pre-merger cases, the first
three factors mentioned are found, while in the post-merger organisations the number
of identified factors within the outer context has risen to five, covering all mentioned
factors as well as demography. Also, consumer behaviour was identified as an
influencing factor, although only in a non-merger. As the sample studied consists of
case organisations originating from two different countries, the possible country of
origin effect deserves elaboration. For a further discussion on national differences, see
chapter 5.4.1.

On a general level, elements from the outer context are identified in eight out of 18 pre-
merger settings (Alpha, Juliet, Quebec, Romeo, Sierra, Tango, Uniform and Victor) and
in seven out of 11 post-merger settings (Charlie, DeltaEcho, Juliet, KiloLima,
MikeNovember, QuebecRomeo, and SierraTango), which might suggest a small
increase in the impact of the outer context. Nevertheless, none of the individual
external factors appear in more than a quarter of the analyzed merger situations. The
political and legal environment and the economic cycle are the two most frequently
identified outer factors that affect both pre- and post merger HR functions –
legislation/political and legal environment being identified in two pre-merger (Alpha
and Quebec) and four post-merger cases (Charlie, DeltaEcho, KiloLima and
MikeNovember), and the economic cycle in four pre- and three post-merger
organisations (Juliet, Romeo, Uniform and Victor, as well as Juliet, QuebecRomeo and
SierraTango).

The findings suggest that the factors within the outer context occasionally affect the HR
function, but the relation between the individual external factors and the identified HR
roles is far from obvious. In order for e.g. demography and the economic cycle to affect
the HR function, they need to be exceptional, or vice versa – there may be something
special about the organisation/HR function as it is affected. For instance, a financially
unstable organisation may be more readily affected by an economic recession than a
stable one, and a newcomer might with greater ease and speed take advantage of
technical innovations than would an old, traditional organisation. As an example my
data show that competing organisations, which are subject to the same industry-
specific crisis implying a decrease in the demand, deal with the situation in very
different manners. For some, the crisis implies huge layoffs made to cut costs, while for
others the action taken is less dramatic. The factor influencing the roles of the HR
function cannot be the crisis alone. Organisational factors such as the financial
situation and business strategy seem to have an impact on the activities.

The political and legal environment. Legislation is something that each and every
organisation is subject to, but only in a few cases does it appear to have an important
effect on the HR role. The small variance found might be explained by differences
between industries as well as by the perceived importance of legislation. Perhaps the
education of the HR professionals moderates the impact of the legal environment; HR
professionals with a degree in law would be more likely to let the legal circumstances
impact the work of the HR function focus on legislation than others (e.g. case Juliet).

Technological development. In recent decades, technological developments have

had a huge impact on certain industries. The factor was indentified to have influenced
only two HR functions, namely Charlie and SierraTango. However, technology has
 175

certainly had an indirect influence on a majority of organisations. In particular, the

administrative role of the HR function seems to have developed substantially because
of the increase of available IT tools.

Consumer behaviour. Within one case organisation (X-ray), technological

development was found to have an extreme impact not only on the organisation per se,
but also on consumer behaviour which in turn forced the organisation to rethink its
existence. The restructurings that followed had a subsequent impact on the role of the
HR function. The findings suggest that consumer behaviour may be of crucial
importance for the whole organisation.

Demography. Demography is identified as an influencing factor of two post-merger

HR functions (QuebecRomeo and SierraTango). The organisations fear a future lack of
talent and hence increased competition for skilled employees.

The impact of other corporations. The impact of other corporations refers to

institutionalisation, including influences from e.g. the industrial environment. Among
the case organisations ‘other corporations’ are identified as an influencing factor in
Alpha, Charlie, Sierra and Tango. The extent to which industry generally speaking can
be regarded as an influencing factor remains unclear. Especially within the service
sector respondents (from both the merger and non-merger sample) who are used to a
prominent HR function argue that it is a question of industry.

Kilo management: In this industry [service provider]…the HR function should always be a

function at top management level.

Yankee HR: In such a service business, HR needs to be part of the management group, because
that’s where the decisions are made.

The business partner role was found in a total of four merger settings, two representing
production industry (Bravo and SierraTango) and two the service sector (KiloLima and
UniVic). In other words, the business partner role is not found in 12 analysed merger
settings representing the production industry and 14 settings within the service sector.
Based on that particular finding, no conclusion can be drawn about the industry’s effect
on the occurrence of the business partner role.

As a matter of fact, the argument made by Juliet’s CFO (Juliet was active in the service
sector), who did not perceive the HR function as a top management function and hence
not a business partner, contradicts the quotes above by the Kilo and Yankee
respondents:

CFO Juliet: I do not see why they would be needed [HR function in top management]. If you look
at other players in this line of business, I do not think you will find any HR manager in the top
management team.

One corporation that appears to have had a strong influence on HR functions in

Finland is Nokia. Respondents from five different case organisations (DeltaEcho, Hotel,
IndiaJuliet, KiloLima and Yankee) mentioned Nokia as an influencing factor. These
organisations either regarded Nokia’s HR to be a model function, or they admitted to
copying some of Nokia’s HR tools. Three of the case organisations employed a former
Nokia HR manager.

HR Kilo: We talk about business HR – Nokia was the first to use that term – but now we use it as
well – cause we are partners with Nokia.
 176

HR Hotel: Our [the HR function’s] aim is to be an industrial bench mark … I have to brag … our
pension costs are of such a calibre that Nokia wants to copy us. But I want their compensation
schemes in return.

The economic cycle. The economic cycle refers to long-term pattern changes in
macro economy, often including four different stages, featuring expansion (upswing),
prosperity (boom), contraction (slump), and recession. According to the study,
conducting a merger during a boom or upswing facilitates integration.

November management: We were fortunate to merge during a boom. It’s always easier to sail
before the wind. Today we are struggling with layoffs and it’s much harder.

Tango HR: We were lucky as we experienced a boom, and hence did not need to focus on any
unfortunate matters; instead we were actually able to focus on the development.

The quotes above suggest that good times are much more likely to imply development
of the HR function, while bad times forces the function to concentrate on cost-cutting
and layoffs. The reformulation of the HR function which might take place as a
consequence of the merger is hence likely to be affected by the economic cycle, so that
recession is more likely to emphasise the negotiating lawyer role while expansion and
prosperity potentially will release HR resources to focus on developmental issues. As an
example, during its integration phase, SierraTango invested 240.000 working hours on
training, divided on 3,000 managers, as part of its management development scheme.

According to the study, economic contraction and recession has an impact on the HR
function, which is likely to strive for increased efficiency during financially difficult
times. The finding is based on the changes that seem to have taken place within the
studied case organisations during the early 2000’s. A question that arises is why these
HR functions did not seek that efficiency during the much deeper recession in the early
1990s. One possible explanation is that the supply of IT tools was scarce in the 90s.
Similarly, the use of IT tools among competitors might have been rare and hence the
institutionalisation effect did not push HR functions to implement efficient IT tools.
Speaking of institutionalisation, in the early 90s Nokia had not yet become a market
leader. Nor had Ulrich (1996) published his work ‘Human Resource Champions’, which
seems to have had an impact on HR functions in general and Nokia’s HR in particular.
As noted above, respondents referred to Nokia’s HR function. Also, some of them (e.g.
KiloLima and Hotel) referred to Re Ulrich’s classical work.

HR Kilo: This [Ulrich’s two-by-two] is our main guide; there is nothing that would
better describe what HRM is all about.

Based on the argumentation above, it seems that the institutionalisation effect on the
HR function is important. The finding is supported by numerous previous research (see
e.g. Truss et al. 2002; Björkman et al. 2007)

5.2.2. The inner context

5.2.2.1. Organisational factors

The inner context is divided into organisational and individual factors. The study
identifies nine different organisational factors that in varying amount appear to affect
the role of the HR function. Five of them were part of the conceptual framework of the
study, namely: administrative heritage; business strategy; degree of
 177

internationalisation; financial situation; and organisational growth. The remaining

four, i.e. type of workforce (blue/white collar); organisational structure; ownership;
and organisational stability have arisen from the data.

Administrative heritage. The administrative heritage, which refers to the existing

organisational attributes, is by far the single most important influencing factor on
organisational level, suggesting that it is difficult for the HR function to get rid of old
routines and patterns. Bartlett and Ghoshal (1989) found in their study the
administrative heritage to be an important influencing factor in every organisation they
studied. Characteristic for the administrative heritage is that it resists change.

Financial situation. The financial situation appears to have influenced a third of the
studied organisations in all three samples (pre-; post-; and non-merger). In some of the
cases the organisational financial situation seems to be linked to the external economic
cycle, forcing the HR function to layoffs and subsequent co-operation negotiations
during stricter times and allowing human resource development and recruitment
during better times. In other cases cost-cutting might be part of the business strategy.

Business strategy. The business strategy appears to have had an influence on the
role occurrence as well, as it was identified in ten of the 30 merger settings analysed
(Bravo, DeltaEcho, Golf, India pre-merger, India post-demerger, Juliet pre-merger,
Juliet post-demerger, Oscar; Quebec and Romeo). How it affects the HR function
appears to vary from context to context. Sanz-Valle et al. (1999) studied the impact of
business strategy on HRM and found that the impact of the business strategy varies
depending on strategy and HR activities, hence stating that one strategy can affect
different HR activities in various ways. This study identifies the business strategy as an
influencing factor mainly in organisations where short-term profitability is the top
priority. For instance, DeltaEcho was subject to a rationalisation process which
highlighted the negotiating lawyer role, India and Juliet had a strict head count in
search for higher profits, also leading to an accentuated negotiating lawyer role, while
the roles played by Romeo HR function were kept to a minimum because the short-
term strategy did not allow any HR initiatives as they were regarded as unnecessary.
The data of this thesis regarding the business strategies of the different organisations is
however scarce, and the strategies vary from organisation to organisation. Thus, it is
argued that the ten HR functions studied in which business strategy appears to have
influenced the HR function, is too heterogeneous a sample to draw any further
conclusions about the ways in which it impacts HR. Hence, this study reckons that
business strategy is a potential influencing factor, but does not draw any further
conclusions on the way in which it impacts.

Additional organisational factors. The other organisational factors this study

identifies – the type of workforce; organisational structure; organisational growth
(organic); ownership; and organisational stability – seem to appear randomly and in a
few cases only, hence lacking greater implications for the HR function. Only one of
these additional organisational factors stem from the theoretical framework
(organisational growth) while the others have arisen from the data.

Type of workforce refers to either white- or blue collar workers, and suggests that the
role of the HR function in some cases varies in accordance with the type of workforce.
In Victor it was for instance argued that young educated professionals were not in need
of surveillance, while Foxtrot experienced frequent brawls on the shop floor.
 178

Organisational structure was identified as an influencing factor in organisations that

lacked an HR function. Both in Lima and Papa HRM was mainly handled by line
managers. The organisational structure might in turn have been influenced by external
factors, such as institutionalisation, as Lima and Papa were active in the same industry.

Moreover study my finds that ownership might impact the role of the HR function.
State owned organisations might be more likely to make a social effort, as in the case of
Quebec, and family owned organisations (Echo, Whiskey) might not perceive high
short-term profits to be the top priority, which for instance some listed organisations
seem to do (Juliet).

Organisational instability was identified to have influenced one of the HR functions

studied (Romeo). It refers to the lack of stability caused by numerous changes of CEO
in a short period. Top management turnover was assumingly not the initial cause of the
instability, but rather a consequence of it, nevertheless leading to increased instability.

The additional organisational factors reported in this section seem to appear in limited
numbers and hence my study does not find them to have had a great impact on HR
functions in general. However, the potential influence of the factors is acknowledged.
The influence of internationalisation is discussed further in section 5.2.3., which
discusses the merger context.

5.2.2.2. Individual factors

The inner context furthermore includes individual factors, which are divided into
factors concerning first the CEO and/or the top management, and second the HR
director and/or HR professionals. The attitude regarding HRM of the first group
appears to have a great impact on the role of the HR function. Likewise, the
competences of the HR director and HR staff, as well as the reputational effectiveness
of this group seem to be of decisive importance for the HR function. These three factors
(i.e. CEO attitude, HR competence and HR reputational effectiveness) are identified in
at least two thirds of the cases studied. The competence of the HR professionals seems
to be particularly important post-merger, as it is identified as an influencing factor in
ten out of 11 post-merger HR functions.

It seems evident that the interplay between the HR professionals and the top
management is important for the role of the HR function. In chapter two, the role-set
theory was discussed in an attempt to define the term role and explain to the reader
how that concept is understood in this study. It seems important to revisit the theory
and discuss to what extent the role expectations held by the role set according to this
study might have a decisive impact on the role performance of the focal HR function.
The discussion is further developed in chapter 5.6.

5.2.3. The merger context

As previously argued, the merger context is a particularly interesting context for

research on the HR function, as a merger implies the integration of two different HR
functions. This thesis has examined ten different mergers and only in one (UniVic) did
the two pre-merger HR functions play the same roles. Hence, in the remaining nine
mergers one was forced to integrate two HR functions that were playing different roles,
and perhaps were subject to very different expectations.
 179

In chapter two, changes in organisational structure, organisational growth,

internationalisation, and the power relation between the parties were discussed as
potential influencing factors within the merger context. The empirical study suggests
that also the newly gained understanding of and attitude towards the other
organisation can have an impact on HR’s roles. All but one of these factors was
identified in less than half of the merged organisation, suggesting that the
circumstances of the mergers differ. The understanding of the other organisation is
nevertheless a factor that seems to have influenced a majority of the merged
corporations.

Changes in organisational structure. As a consequence of merger integration the

structure of the pre-merger organisations are likely to give way in new shared
structures. The changes are likely to concern most of the organisation including the HR
function. Below I will argue that the change in organisational structure can be traced
not only to the merger per se but also to the growth of the company, which is a result of
the merger. Furthermore, the understanding of the other organisation and the attitude
towards learning from the other will affect the degree to which the organisation and the
HR function as part of it will change.

Growth. The sudden growth of the organisation is yet another direct consequence of
the merger. The growth in turn appears to speed up the need for common processes
and IT tools.

HR Quebec: In Sweden we have 17 different IT systems for HR administration. It’s the same in
Finland. Taking into account that our company operates in several countries the total number of
IT systems for HR purposes currently easily amounts to 100. You don’t have to be Einstein to
figure out this is expensive and inefficient.

Interestingly, the pre-merger organisations had tolerated the inefficiency that

approximately 50 different IT tools for HR caused, as the problem was not taken care of
until after the merger integration. A probable explanation is that the lack of consistency
in organisational processes and tools that emerge through organic growth is not as
visible as the problems that arise from a sudden growth caused by a merger. The
perception of inefficiency appears to be likely to become untenable post-merger.

Through the sudden growth, a merger is thus likely to cause a perceived need to
restructure the organisation. Half of the ten case organisations had post-integration
launched a new IT tool, which would replace all the existing ones in order to improve
the efficiency.

Kotey and Sheridan (2004) found that organic organisational growth tends to lead to
hierarchical structures, increased documentation and more administrative processes in
the HR function. These changes increase the administrative workload. A merger seems
to take the needs of the HR function one step further, perhaps as a result of the
economies-of-scale sought for, by improving the efficiency. The pre-merger case
organisations studied in this thesis were originally large corporations, hence they had
long before the merger experienced the growth Kotey and Sheridan (2004) refer to.

Internationalisation. One factor which affects post-merger organisations more than

pre-merger is the degree of internationalisation. When two international organisations
merge, the number of foreign subsidiaries increases dramatically. This appears to have
an impact on the HR function which will have to face the increased complexity of
managing HRM globally.
 180

Power relation. This study investigates the HR function in mergers. All ten merger
cases included in the study are regarded to be mergers based on the communicated
aspiration of the management group to employees, media, and other stakeholders.
Nevertheless, the data reveal that several of the case mergers were instead perceived by
their employees as acquisitions, with one apparent acquirer organisation and one
acquiree. In these organisations, the buyer took the lead in integration.

HR Juliet: There’s no such thing as an equal merger. The India HR manager made all the
decisions, while we [Juliet’s HR professionals] were in the position of fosterlings.

The construction of the post-merger HR function seems to be affected by the

negotiating power the HR director possesses as a consequence of the power relation in
the deal (i.e are two equal firms joining forces or is one firm wolfing down the other)
Depending on his/her perception of his/her role as either partner with the HR staff of
the other pre-merger organisation or acquirer of the other HR function, his/her ability
to impact on the post-merger HR practices and search for best practice is likely to vary.
Thus, the study suggests that the power relation builds on the type of deal (acquisition
vs. merger), as it is likely to have an important impact on the post-merger HR director’s
perceived power to influence the building of the post-merger HR function.

Understanding of the other party. The understanding of the other merger party,
including its HRM practices, appears to have a developmental impact on the post-
merger HR function. Thus, the merger context can be regarded a window of
opportunity to reformulate outdated practices. It is a context in which best practices
can be sought, old routines can be questioned and the general aspiration can be to
improve the business. The empirical evidence of this study suggests that merging
organisations often succeed in developing the HR function as a consequence of the
merger.

HR Victor: Either one party has to adapt to the other party’s policies and procedures or then both
parties together create something new. Creating something new, calls for a lot of time and effort.
We have genuinely got to know each other and tried to find the best parts.

The changes in the HR function upon integration are seldom dramatic, but often imply
a movement towards becoming more versatility. Nevertheless, the study also reveals a
few cases in which the number of HR roles played in the post-merger function is less
than pre-merger, because important HR competence vanished from the organisation
upon the merger and the post-merger HR function was therefore not capable of playing
all pre-merger roles. Apparently problems occurred in mergers in which the stronger
party disregards the other party’s HR competence.

Attitude towards the other party. The attitude is important when it comes to
learning from the other party. The changes in the organisational structure as well as the
changes in shared values appear as a result of integration and are linked to the
understanding the organisations gain of the other party. Also, the power relation
between the two parties is likely to have an impact on the attitude towards learning
from the other. The more changes that occur after the merger, the more can one
assume that the pre-merger organisations have been willing to rethink old structures
and values. As concepts, structural changes and changes in values and identity are
completely different, but in this context they are united by the will of the merger parties
to change. Change of structures, values and identity does not happen as a direct
consequence of the merger (compared to e.g. growth and increased
internationalisation) instead it is subject to the attitude of the merging parties to learn
from each other and to grow stronger together. A positive attitude towards the other
 181

party is important for the organisations in general, but also applies to the HR function.
My study finds evidence of both positive and negative attitudes. As an example of a
positive attitude, Delta’s HR function was open-minded towards Echo HR function and
assumingly developed its HRM.

HR DeltaEcho: You have one HR function consisting of ten people and another consisting of
ten. A merger makes it twenty. They do probably not possess exactly the same knowledge and
experience, instead the HR knowledge grows and the supply of the HR function thus becomes
broader.

Nevertheless, Echo HR director was less appreciative of the Delta HR function.

HR Echo: There are few things competence wise that have come from Delta. It’s Echo that has
made the input in all development matters, regarding also, logistics and marketing.

Elaborating on Empson (2001) a negative attitude towards the co-workers of the other
merger party is to be expected. Empson found that employees generally are not willing
to share their knowledge with the employees of the other merger party.

HR’s involvement in the merger integration process. A new theme that arises
from the cross-case analysis is the impact of HR’s involvement in the integration
process on the post-merger role of the HR function. The integration process generally
speaking implies two main tasks for the HR function, namely 1) to integrate the own
function and 2) to support line managers and top executives in the integration of the
entire organisations. According to Björkman and Søderberg’s (2006) single case study
the HR function easily concentrates on the former activity. My study shows that
integration of the HR function is an activity the HR function is obliged to take care of,
and as the HR directors’ future careers depend greatly on the outcome of that particular
integration they are likely to prioritise it. According to this study, the second main task,
to support the integration of the entire organisations, receives less attention. My
finding hence supports Björkman and Søderberg’s (2006) results. An involvement in
the latter process is, however, a potential way of improving the HR function’s
reputational effectiveness, and changing the role. In KiloLima, UniVic and SierraTango
the HR managers took a leading role in integration. They succeeded in exceeding the
expectations of the CEOs, and after the merger the HR function was perceived to be an
important business partner, which it had not been pre-merger. Hence, the integration
phase can be regarded an important window of opportunity for the HR function.

5.2.4. Summary of influencing factors

Chapter 5.2 has discussed the factors that appear to have influenced the roles played by
the HR function. In this section, three tables are presented. The first (table 58)
summarises the factors that were most commonly identified in the pre-merger setting,
and the second table (table 59) summarises those factors that have been identified most
frequently in the post-merger setting. In these tables, the factors are divided in frequent
and very frequent factors, with the most frequent ones in bold. The variation between
factors affecting the pre-merger and the post-merger settings is limited, although the
number of factors influencing post-merger HR functions is higher than the number of
factors affecting pre-merger HR, suggesting a wider variety of influencing factors in the
post-merger setting than in the pre-merger setting. All factors are listed in alphabetical
order.
 182

Table 58 Most common factors influencing the role of the pre-merger HR function

The outer x Economic cycle

context
The inner Organisational x Administrative heritage
context x Financial situation
Individual CEO / top x Attitude regarding
management: HRM
HR professionals: x Competence
x Reputational effectiveness

Table 59 Most common factors influencing the role of the post-merger HR function

The outer x Political and legal environment – mainly implying legislation

context x Economic cycle
The inner Organisational x Administrative heritage
context x Financial situation
Individual CEO / top x Attitude regarding
management: HRM
HR professionals: x Competence
x Reputational effectiveness
The x HR’s involvement in the merger integration process
merger x New gained understanding of the other organisation
context x Sudden organisational growth
x Power relation
 183

The third table in this section (table 60) is a complete list of factors that have been
identified in this study as factors influencing the HR function. Most of these factors can
be traced to previous scholarly work; although the factors in italics have arisen from the
data.

Table 60 Summary of factors influencing the role of the HR function

The outer x Consumer behaviour – identified in non-mergers

context x Demography
x Economic cycle
x Other corporations (institutionalisation)
x Political and legal environment
x Technological development
The inner Organisational x Administrative heritage (/organisational culture)
context x Business strategy
x Degree of internationalisation
x Financial situation
x Organisational growth, i.e. organic
x Organisational (in)stability
x Organisational structure
x Ownership
x Type of workforce i.e. blue/white collar
Individual CEO / x Attitude regarding HRM
top
management:
HR x Competence
professionals: x Reputational effectiveness
The merger x Changes in organisational structure
context x HR’s integration involvement
x Internationalisation
x Organisational growth
x Power relation
x Understanding of and attitude towards the other organisation
 184

5.3. The development of the HR function

This section combines the presentation of identified roles with that of the factors found
to influence their occurrence, now analysing the data on the occurrence of the
individual HR roles in different contexts. The five proposed HR roles are discussed
separately, in an attempt to distinguish the factors that influence each role. Figures that
illustrate the relationships between specific roles and specific influencing factors are
included.

5.3.1. The employee advocate

The employee advocacy role is as noted above a rarity. Not once in the data was it
clearly identified. The demography, including the difficulty of finding employees, could
be a potential factor influencing the HR function to focus on the needs of the
employees. Nevertheless, this study shows no such evidence. Although several
respondents fear a future lack of employees, and worry about the employer brand of the
organisation, not much appears to have been done in terms of employee advocacy.

The scarce identification of the employee advocate role in the complete data set may be
viewed as somewhat surprising. Studies made in the United States (e.g. Conner and
Ulrich 1996) have suggested a quite wide spread presence of the employee champion
role. A Finnish study (Hiillos 2004) likewise found evidence for HR managers caring
about employees, in the sense of an employee advocate. A possible explanation for the
differing findings is the context in which the studies have been conducted. The focus of
Hiillos’ (2004) study was explicitly on emotion-handling strategies in crisis situations,
while my study deals with the merger context which assumingly leaves less time for the
support of individual employees.

Comparing a US study with a Finnish one is problematic, as discussed in chapter 2.4.1.

In Finland trade unions play a more important role than they do in the US. It could be
argued that Finnish unions have traditionally taken care of the interests of the
employees and the employers have responded by obeying collective agreements. Thus,
it can be argued that the negotiating lawyer role is a substituting role, as it has
traditionally been important in Finnish HR functions.

Francis and Keegan (2006) noted that the employee champion role is shrinking and
regarded it partly a consequence of HR professionals’ preference of working with
strategic issues rather than addressing human concerns, as the first is perceived a
better career route. Also, they argued that a heavy focus on the business will reduce the
understanding of tensions in meeting employee needs.

Based on the factors that appear to have influenced the four situations in which the
employee advocate role was partly identified (Bravo, Echo, DeltaEcho and
QuebecRomeo), it is very difficult to draw any conclusions concerning the relationship
between the individual factors and the employee advocate role. In the four situations,
the attitude of the CEO/management group towards HRM has been positive and the
HR function has been perceived to possess a high level of competence. The other
influencing factors found in one or more of those situations where the employee
advocate was identified are legislation, impact of other corporations, competition,
economic cycle, administrative heritage (identified twice), organisational stability,
 185

financial situation, and growth of the organisations. These seem to be appear randomly
as they are present only once in four cases, expect for administrative heritage which is
identified in most of the cases studied. Looking at the other side of the coin,
administrative heritage does not feature as an influencing factor in two of the cases
where the employee advocate was identified (Bravo and QuebecRomeo). Perhaps, this
might indicate that organisations that are not burdened by the administrative heritage
are more likely to focus on employee advocacy than others. The explanation would be
that Finnish and Swedish HR functions have not traditionally included the employee
advocate role. There has rather been a focus on industrial relations, having trade
unions guarding the employees’ interests.

Yet another possible explanation is that the HR function does not have enough
personnel to play the employee advocate role. The HR function is in fact quite likely to
feel pressure to downsize.

HR Kilo: We have never had enough HR staff to be an employee champion. We cannot be that
close to all employees, instead we focus on supporting line managers.

Factors related to the merger context that appear to have influenced those post-merger
HR functions that play the employee advocate are power relation, understanding of the
other organisation, and attitude towards learning from the other party. The
understanding of the other organisation was identified as an influencing factor in both
of the two post-merger HR functions that played the employee advocate role, while the
other factors mentioned were identified in one of the two. Looking at the complete data
set, the same factors are identified as influencing factors of all studied post-merger HR
functions, ‘understanding of the other organisation’ being the most general identified
factor in the complete data set. Hence, the identified influencing factors do not seem to
help us form a profile for functions playing the employee advocate.

Figure 43 below illustrates the influencing factors that were identified in those settings
where the employee advocate role was also found. The left of the figure lists all
influencing factors. The factors in bold have appeared frequently in the complete data,
and capital letters indicate the factors that had the most influence. To the right, the five
different HR roles are listed. The outlook of the arrows varies. A stable line indicates
that the influencing factor in question has been identified; a bolded line suggests an
important influence, while a dotted line suggests that the influencing factor in question
has had a comparatively low influence. No line indicates that the study has found no
relationship between the influencing factor and the HR role in question. Figures 43-47,
which are presented in this chapter, all follow the same logic. Regarding figures 43 and
44, concerning first the employee advocate role and second the business partner role,
the number of cases in which the roles in question have been identified are few and
hence the identification of influencing factors need to be seen in this perspective.
 186

Business
xConsumer behaviour partner
xDemography
xEconomic cycle
xOther corporations
xPolitical and legal environment
xTechnological development

Strategy
xADMINISTRATIVE HERITAGE implementer
xBusiness strategy
xDegree of internationalisation
xFinancial situation
xOrganisational growth (organic)
xOrganisational (in)stability
xOrganisational structure
xOwnership
xType of workforce (blue/white collar)
Employee
Advocate
xCEO’S ATTITUDE REGARDING HRM

xHR COMPETENCE
xHR’s reputational effectiveness
Negotiating
Lawyer
xChanges in organisational structure
xSudden internationalisation
xSudden organisational growth
xPower relation
xUnderstanding of and attitude
towards other organisation
xHR’s integration involvement Process
Engineer

A stable arrow indicates that the influencing factor in question has been identified; a bolded arrow suggests an
important influence, while a dotted arrow suggests that the influencing factor in question has had a comparatively low
influence. No line indicates that the study has found no relationship between the influencing factor and the HR role in
question.

Figure 43 Factors affecting the employee advocate role

 187

5.3.2. The business partner

The business partner is identified in as few cases as the employee advocate, however
with the difference that the business partner is clearly identified in three cases and
partly in one. The settings all feature a top management which is dedicated to HRM
and an HR director who is perceived to be competent. The external influencing factors
identified (i.e. legislation; technology; impact of other corporations; demography; and
economic cycle) appear to be random, which I regard logical, as to the best of my
understanding a business partner is not dependent on the outer context. On the
organisational level, degree of internationalisation stands out, as it is identified in half
of the focal cases while in only one fifth of the complete sample. In a multinational
organisation, which is also led by a management group that truly values HR and has a
competent HR staff, the complexity of global people management might be regarded as
reason enough for the HR function to play a business partner role. This reasoning
assumes that HRM becomes more complicated the more international an organisation
grows, and that the importance of dealing with the complexity is likely to be understood
by a top management which regards HRM highly.

Other influencing factors identified in the business partner cases were administrative
heritage (identified twice) and financial situation. The same reasoning that was applied
regarding employee advocates, concerning the lack of impact of administrative
heritage, seems to be practicable also when it comes to the business partner role.
Administrative heritage is identified as an influencing factor in more than 2/3 of the
complete data sample (Alpha, Bravo, Charlie, Echo, DeltaEcho, Foxtrot, Golf, Hotel,
India, Juliet, Kilo, Lima, November, Oscar, Quebec, Sierra, Tango, Victor, and Univic).
However, it seems to have affected only half of the HR functions in which the business
partner role was found (Bravo and Univic). Hence, it seems as if the least frequently
appearing roles, i.e. business partner and employee advocate, are more likely to occur
in HR functions which are not affected by a heavy administrative heritage (i.e.
KiloLima, SierraTango and QuebecRomeo). These two roles have not traditionally been
part of the HR/personnel function, and hence their existence is not part of the
administrative heritage of the HR functions studied.

Factors deriving from the merger context that seem to have influenced the post-merger
HR function that play the business partner role are changes in organisational structure,
sudden organisational growth, power relation, and understanding of the other
organisation. Each of these factors were identified only once, except changes in
organisational structure, which was identified twice (UniVic and SierraTango), in the
three post-merger HR functions that played the business partner role. As the sample is
limited, one cannot draw any far reaching conclusions, although it is conceivable that
the more the organisation changes due to the merger the more likely is the HR function
to play a business partner role. The attitude of the key decision makers in a merger that
allows large structural changes to take place might suggest an open minded attitude to
changes in general, and hence a possibility for the HR function to make its mark.

One important finding is the potential impact of HR’s involvement in the merger
integration process. As noted in section 5.2.3 the cross-case analysis reveals the impact
of HR’s involvement in the integration process on the post-merger role of the HR
function. All three post-merger HR functions that played the business partner role (i.e.
KiloLima, SierraTango and UniVic) had taken an active role in the merger integration.
As noted above, the organisational structures of these organisations changed as a
consequence of the merger, but even more importantly, the HR directors were in the
driving or at least co-driving seat when the structures were reformed. Looking at the
 188

other side of the coin, no other HR function included in the data set was equally pro-
active as KiloLima, SierraTango and UniVic during the integration process. Some HR
functions did indeed organise training (e.g. DeltaEcho, MikeNovember and
QuebecRomeo), while others were mainly concerned with the own function (e.g. Hotel
and IndiaJuliet). The pro-active stance of KiloLima, SierraTango and UniVic in the
integration directed them towards the business partner role.

The fact that the business partner is a rarity, combined with the assumption that the
attitude of the management group concerning HRM is of high importance in the
business partner role performance, suggests that top management seldom regards the
HR director a true business partner.

HR Tango: It’s evident that in the case the management group does not regard the HR director to
be competent enough, they won’t include him at top level.
 189

Business
xConsumer behaviour partner
xDemography
xEconomic cycle
xOther corporations
xPolitical and legal environment
xTechnological development

Strategy
xADMINISTRATIVE HERITAGE implementer
xBusiness strategy
xDegree of internationalisation
xFinancial situation
xOrganisational growth (organic)
xOrganisational (in)stability
xOrganisational structure
xOwnership
xType of workforce (blue/white collar)
Employee
Advocate
xCEO’S ATTITUDE REGARDING HRM

xHR COMPETENCE
xHR’s reputational effectiveness
Negotiating
Lawyer
xChanges in organisational structure
xSudden internationalisation
xSudden organisational growth
xPower relation
xUnderstanding of and attitude
towards the other organisation
xHR’s integration involvement Process
Engineer

A stable arrow indicates that the influencing factor in question has been identified; a bolded arrow suggests an
important influence, while a dotted arrow suggests that the influencing factor in question has had a comparatively low
influence. No line indicates that the study has found no relationship between the influencing factor and the HR role in
question.

Figure 44 Factors affecting the business partner role

 190

5.3.3. The negotiating lawyer

The negotiating lawyer does not appear to be as focal post-merger as pre-merger. One
possible explanation is that the importance of the trade union movement has gradually
decreased. Guest (1999:95-96) argues that the changing economic and political
climates in the US and UK has resulted in some reduction in trade union pressures on
management. This has facilitated a switch in emphasis away from collective and
adversarial issues associated with traditional industrial relations towards individual co-
operative issues of the sort associated with HRM (Guest 1999). According to Vanhala
(1995:42), the recession experienced by Finland in the early 1990s put pressure on
Finnish working life to become more flexible. In order to gain greater competitiveness,
effectiveness and flexibility, changes in the collective bargaining system were
demanded (Vanhala 1995).

Management Kilo: The industrial relation part is of course also handled by HR, but it has become
quite invisible, it’s a part of business as usual, seldom discussed at management meetings. The
union issues are not as topical as they were in the 70s and 80s.

The relationship between internationalisation and the importance of the negotiating

lawyer appears to be ambiguous. On the one hand, it can be argued that the more
international an organisation grows the more focus there will be on aspects other than
industrial relations, which are regarded as country-specific.

HR Tango: In Finland, one can regard oneself an HR specialist as long as one masters contracts
and legislation. That is not the case elsewhere, where other aspects do count.

Nevertheless, an opposite argument is that the more global an organisation grows, the
more complex will legislation get and hence the negotiating lawyer role will be of utter
importance. Several respondents discussed the EWC37 and argued that the HR function
had a prominent role in the management group because of the EWC. The merger
context is regardless of country of origin likely to make topical a streamlining of
employment contracts, collective agreements etc. Thus, there are good arguments for a
continued importance of the negotiating lawyer role.

Management November: …Nowadays there are so many HR issues on the management agenda,
such as compensation and strikes. Also, as part of the EWC, after every board meeting, we have a
meeting with employee representatives that is led by the HR director. In my opinion this requires
that he is a member of the team.

Nevertheless, although the negotiating lawyer role is identified in the post-merger

organisations, the role seems to be losing ground. The development is in particular
apparent when comparing with the other roles played by the HR function that are
growing in terms of the time that HR spends on them. In all situations where legislation
was perceived to be an influencing factor, the negotiating lawyer role was identified.
Other influencing factors were, first within the outer context: technology; impact of
other corporations and economic cycle; and second within the inner organisational
level: the structure of the organisation, type of workforce, degree of
internationalisation, administrative heritage, financial situation, business strategy,
organic growth, and ownership. Among these, the administrative heritage featured
most frequently. Perhaps it could be argued that the negotiating lawyer role has
historically been an important part of personnel administration and hence HR
functions that are largely influenced by the administrative heritage are more likely to
play the negotiating lawyer role. The argument is supported by the findings, as all four

37 European Works Council (see footnote 27)

 191

post-merger HR functions that appear to be influenced by the administrative heritage

play the negotiating lawyer role (Charlie, DeltaEcho, India and Juliet). Additionally
four post-merger HR functions play the negotiating lawyer role, without being
influenced by the administrative heritage (Hotel, KiloLima, MikeNovember, and
SierraTango), two of these functions are, however, affected by legislation (KiloLima and
MikeNovember), while two seem to be random cases.

Looking at the merger context, six influencing factors were identified, i.e. changes in
organisational structure, sudden growth, internationalisation, power relation,
understanding of other organisation, and attitude towards learning from the other
party, The frequency of the specific factors does not differ between the overall findings
and the specific context of HR functions in which the negotiating lawyer role was
played. Both in this particular set and in general, understanding of the other
organisation is the most frequent factor within the merger context.

To summarise, the negotiating lawyer role is appearing less frequently in post- than
pre-merger HR functions, but is still likely to appear post-merger in HR functions
which are perceived to be affected by legislation and/or administrative heritage.
 192

Business
xConsumer behaviour
xDemography partner
xEconomic cycle
xOther corporations
xPolitical and legal environment
xTechnological development

Strategy
xADMINISTRATIVE HERITAGE
xBusiness strategy implementer
xDegree of internationalisation
xFinancial situation
xOrganisational growth (organic)
xOrganisational (in)stability
xOrganisational structure
xOwnership
xType of workforce (blue/white collar)
Employee
Advocate
xCEO’S ATTITUDE REGARDING HRM

xHR COMPETENCE
xHR’s reputational effectiveness
Negotiating
Lawyer
xChanges in organisational structure
xSudden internationalisation
xSudden organisational growth
xPower relation
xUnderstanding of and attitude
towards the other organisation
xHR’s integration involvement Process
Engineer

A stable arrow indicates that the influencing factor in question has been identified; a bolded arrow suggests an
important influence, while a dotted arrow suggests that the influencing factor in question has had a comparatively low
influence. No line indicates that the study has found no relationship between the influencing factor and the HR role in
question.

Figure 45 Factors affecting the negotiating lawyer role

 193

5.3.4. The strategy implementer

The strategy implementer is gaining ground, as it frequently appears after a merger.

According to the study, HR functions that play the strategy implementer role are
influenced by the following external factors: legislation, impact of other corporations,
technology, consumer behaviour; economic cycle, and demography. The appearance of
the external factors is scarce, economic cycle being the most common one. It features in
a third of the strategy implementer cases. The organisational factors identified are
organisational stability, business strategy, type of workforce, degree of
internationalisation, administrative heritage, financial situation; and organic growth.
The two most frequently appearing factors are administrative heritage and financial
situation, each featuring in half or more than half of the functions that play the strategy
implementer role. Other factors appear only in one fourth of the cases or less. The
result does not differ from the overall appearance of influencing factors in HR
functions. Thus, there are no factors that appear either significantly more or less often
in a function that plays the strategy implementer than in a function that does not play
that specific role. In other words, the study does not identify any specific factor that
would significantly increase the probability of the HR function to play the strategy
implementer role.

Five influencing factors that stem from the merger context are identified in the post-
merger HR functions that play the strategy implementer role. These are power relation,
changes in organisational structure, understanding of other organisation, attitude
towards learning from the other party, and sudden growth. As the strategy implementer
role is present in every studied post-merger HR function I do not see that any of these
factors would have had a specific impact on the strategy implementer role. The strategy
implementer role can thus not be linked to any context or factor in particular, but can
assumingly be played by any HR function.

The fact that the frequency of the role is increasing might suggest that HR functions in
general are changing in that very direction. The increased importance of the strategy
implementer role might be regarded the HR functions’ response to the literature calling
for a more strategically oriented HR function (e.g. Ulrich 1996; Ulrich and Brockbank
2005b). In a recent study, Truss (2008) finds evidence for the HR functions in the
public sector in the UK to have become increasingly strategic. The findings of this study
suggest that such a trend is widespread in different European countries.
 194

Business
xConsumer behaviour partner
xDemography
xEconomic cycle
xOther corporations
xPolitical and legal environment
xTechnological development

Strategy
xADMINISTRATIVE HERITAGE implementer
xBusiness strategy
xDegree of internationalisation
xFinancial situation
xOrganisational growth (organic)
xOrganisational (in)stability
xOrganisational structure
xOwnership
xType of workforce (blue/white collar)
Employee
Advocate
xCEO’S ATTITUDE REGARDING HRM

xHR COMPETENCE
xHR’s reputational effectiveness
Negotiating
Lawyer
xChanges in organisational structure
xSudden internationalisation
xSudden organisational growth
xPower relation
xUnderstanding of and attitude
towards the other organisation
xHR’s integration involvement Process
Engineer

A stable arrow indicates that the influencing factor in question has been identified; a bolded arrow suggests an
important influence, while a dotted arrow suggests that the influencing factor in question has had a comparatively low
influence. No line indicates that the study has found no relationship between the influencing factor and the HR role in
question.

Figure 46 Factors affecting the strategy implementer role

 195

5.3.5. The process engineer

The process engineer is active in most of the analysed situations, which suggests the
importance of the role is not linked to any particular influencing factor but rather that
it is an integrated part of the HR function per se. In those organisations where no
process engineer role was identified, there had never been an HR function. The HRM in
the case organisations Lima and Oscar was managed by line managers; hence, the
companies lacked HR departments and HR staff. In all other case organisations, the
process engineer appears to be the foundation of the HR function.

HR Tango: One thing leads to another. Administration and industrial relations need to be taken
care of before the function can move further to other tasks. One cannot be too picky and chose
not to work on the administration; it needs to be taken care of as well.

HR Papa: The HR administration has to function frictionless. That’s the only way to get
credibility and earn a more important role.

The reasoning is in line with that of Monks’ (1993) framework, which is a bolt-on model
suggesting that less sophisticated models of HRM are included in more sophisticated
ones.

At a first glance, the process engineer role does not appear to have been subject to any
larger changes, as it used to be, and still is a very central role. The work within the
process engineer role, however, seems to be under pressure to make the HR processes
more efficient, which is made apparent by the widespread introduction of all-
encompassing IT-tools in post-merger HR functions. Therefore it is argued that
changes have occurred within the role. These findings are furthermore in line with
Ulrich’s and Brockbank’s (2005a) arguments about the administrative expert changing
into a functional expert (see chapter 2.3.5).
 196

Business
xConsumer behaviour partner
xDemography
xEconomic cycle
xOther corporations
xPolitical and legal environment
xTechnological development

Strategy
xADMINISTRATIVE HERITAGE implementer
xBusiness strategy
xDegree of internationalisation
xFinancial situation
xOrganisational growth (organic)
xOrganisational (in)stability
xOrganisational structure
xOwnership
xType of workforce (blue/white collar)
Employee
Advocate
xCEO’S ATTITUDE REGARDING HRM

xHR COMPETENCE
xHR’s reputational effectiveness
Negotiating
Lawyer
xChanges in organisational structure
xSudden internationalisation
xSudden organisational growth
xPower relation
xUnderstanding of and attitude
towards the other organisation
xHR’s integration involvement Process
Engineer

A stable arrow indicates that the influencing factor in question has been identified; a bolded arrow suggests
an important influence, while a dotted arrow suggests that the influencing factor in question has had a
comparatively low influence. No line indicates that the study has found no relationship between the
influencing factor and the HR role in question.

Figure 47 Factors affecting the process engineer role

 197

5.3.6. Summary of the development of the HR function

To further clarify the findings presented in section 5.3, these are summarised in table
61. The table contains as rows the various influencing factors and as columns the five
HR roles. The importance of the respective influencing factors on the role occurrence is
shown in the cells: An empty circle stands for no influence, a triangle for some
influence and a black circle for strong influence.
 198

Table 61 Summary of the impact of the influencing factors on the five HR roles

Process Negotiating Employee Strategy Business

Engineer Lawyer Advocate Implementer Partner
Consumer U U  U 
behaviour
Outer context

Demography U   U U
Economic cycle U U U U U
Other corporations U z U U U
Political and legal U z U U U
environment
Technological U U  U U
development
Administrative z z U z U
heritage
Business strategy U U  U 
Degree of U U  U z
Organisational factors

internationalisation
Financial situation U U U U U
Organisational U U U U 
growth (organic)
Inner context

Organisational U  U U 
(in)stability
Organisational U U   
structure
Ownership U U   
Type of workforce U U  U 
(blue/white collar)
CEO attitude U U z U z
Individual

regarding HRM
factors

HR competence U U z U z
HR’s reputational U U z U z
effectiveness
Changes in U U  U U
organisational
structure
Sudden U U   
internationalisation
Merger context

Sudden U U  U U
organisational
growth
Power relation U U U U U
Understanding of U U U U U
and attitude
towards the other
organisation
HR’s integration U U   z
involvement

no influence U some influence zstrong influence


Looking at the table it is apparent that the same influencing factors are important for
the emergence of several of the HR roles. A question that arises is how these factors are
interrelated, how together they form the prerequisites for a certain role to occur. My
 199

study finds evidence for certain factors affecting certain roles, but is seems very difficult
to draw conclusions regarding the interrelations between the factors and their impact
on the roles. This is indeed a very interesting area that would benefit from further data
collection and exploration.

5.4. Comparative analyses

In this section the comparative elements of the study are further investigated. First, the
data consists of both Finnish-Swedish and Finnish domestic large-scale mergers. The
extent to which the nationality of the merged organisations affects the pre-merger HR
functions and/or the outcome of the post-merger HR function is discussed in section
5.3.1. The subsequent section (5.3.2) compares the merger cases with those of the non-
mergers, looking for similarities and dissimilarities in the development of the HR
function.

5.4.1. Comparison of differences in nationality

The empirical data consist of ten merger cases. Seven of those mergers had one Finnish
party and one Swedish party. The remaining three merger cases were Finnish domestic
deals. The research evidence suggests that to a limited degree the roles played by the
HR functions do vary according to country of origin.

The negotiating lawyer role appears to be more frequent in Finnish organisations than
in Swedish. One third of the Swedish pre-merger HR functions played the negotiating
lawyer role, whereas more than ¾ of the Finnish pre-merger HR functions did.
Moreover, all of the Finnish domestic mergers had a negotiating lawyer in the post-
merger HR function, while three out of seven Swedish-Finnish mergers lacked this role
(OscarPapa, QuebecRomeo and UniVic). What is more, the organisations lacking the
negotiating lawyer role were mergers in which the Swedish party had played a leading
role. It was noted above that the main influencing factors of the negotiating lawyer role
are legislation, impact of other corporations and administrative heritage. The extent o
which these factors affect the differences found in the two different national contexts
remains unclear. The labour law of the neighbouring countries is fairly similar, and all
organisations can be affected by other organisations. Hence, it is possible that the
administrative heritage is the most important influencing factor.

As noted above the strategy implementer role is found in all post-merger HR functions
this study covers, but only in approximately one third of the pre-merger HR functions.
The division between Finnish and Swedish firms is even, suggesting that the
development of the strategy implementer role does not differ between Finnish and
Swedish organisations.

The difference in the frequency of the remaining three roles is small. One assumption
can, however, be made based on the data, namely that HR functions of Swedish origin
tend to be more versatile than their Finnish counterparts. Although the Swedish sample
is much smaller than the Finnish, the number of business partners and employee
advocates identified is equal in the exclusively Swedish sample and the exclusively
Finnish one – hence the percentage is higher in the Swedish sample. In order to shed
more light on the differences, further research is needed.
 200

The table below summarizes the appearance of the separate roles depending on the
nationality of the analyzed HR functions. The study possesses data regarding 30 HR
functions related to mergers. Six of these settings are Swedish pre-merger
organisations, thirteen are exclusively Finnish pre-mergers. The post-mergers are
either a Finnish-Swedish mix (7) or purely Finnish (4)38.

Table 62 The frequency of HR roles depending on nationality and phase of merger

PRE-MERGER POST-MERGER
Swedish Finnish Swedish- Finnish-
Finnish Finnish
Negotiating lawyer 2/6 10/13 4/7 4/4
Business partner 1/6 -/13 2/7 1/4
Employee advocate 1/6 1/13 2/7 -/4
Strategy implementer 2/6 5/13 7/7 4/4
Process engineer 5/6 13/13 7/7 4/4

5.4.2. Comparison of developments in mergers and non-mergers

This chapter compares the key findings of the HR role development in mergers with
those of the non-merged organisations. The mergers have been analysed at two points
of time, pre- and post-merger. The study of the non-mergers likewise covers a longer
period of time, and analysis have been made of first, an early stage, i.e. corresponding
to a situation 5-10 years in the past, and a current state, which refers to the time when
the data was collected. The first one corresponds to the pre-merger state while the
latter is comparative to the post-merger analysis. Nevertheless, the data available on
the early stage were scarce because the HR managers of the early stage were not
available for interviews, wherefore the understanding of the early stage is not as
thorough as it is in the rest of the analyzed HR functions. As the thesis nevertheless
possessed a certain level of understanding of the early stages I decided to make it
explicit in the report as it adds to the complete understanding of the development of
HR functions in general.

The non-merger cases are illustrated below. Three of the four early stage non-merger
HR functions were perceived to be traditional, mainly focusing on personnel
administration. In these cases the business partner, the strategy implementer and the
employee advocate can be ruled out. The process engineer on the other hand is found to
have been the most vivid role. The extent to which the negotiating lawyer role was
present in the early stage non-mergers is uncertain, as there are no actual data on the
role being present. My assumption based on my understanding regarding pre-merger
cases is nevertheless that Finnish traditional HR functions some years back may have
included a negotiating lawyer role in their tactical HR function. One of the four early
stage non-merger HR functions differed from the others, having the strategy
implementer role, while otherwise being tactical.

38 Although the number of domestic mergers was three, the number of domestic post-mergers is four

because of the demerger of India and Juliet.

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Strategic

Strategy
Implementer
Business (1/4)
Partner
(0/4)

Proactive Reactive

Employee
Advocate
(0/4)

? Process
Negotiating Engineer
Lawyer(1/4) (4/4)
Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 48 The frequency of roles in the early stage non-merger setting

The illustration of the current state shows a much more versatile and strategic HR
function, as the strategy implementer is equally important as the process engineer, and
the business partner role is also present in half of the cases.
 202

Strategic

Strategy
Business Implementer
Partner (4/4)
(2/4)

Proactive Reactive

Employee
Advocate
(0/4)

Negotiating Process
Lawyer Engineer
(1/4) (4/4)
Tactical

Colour description:

Role not identified Some elements of role identified Role clearly identified

Figure 49 The frequency of roles in the current non-merger case setting

The strategy implementer appears to have gained ground in post-merger organisations

compared with pre-merger organisations. Likewise, there is a clear increase in the
frequency of that particular role in non-mergers. Above it was argued that it appears to
indicate that a shift in the HR function in general is taking place, and the findings from
the non-merger sample support that assumption. The HR function seems to slowly take
on new tasks, which distinguish the HR functions of today from yesterday’s personnel
functions. Torrington et al. (2008) argue that the HR function has developed
considerably over the years and that it currently is in a period of key change. Guest and
King (2004) present an opposing view, according to which HR specialists struggle to
improve the role of the HR function.

The development of the process engineer role in non-mergers resembles that in the
merged organisations, as the process engineer used to be a focal role, and it still
appears to be. Also, in the non-mergers, two cases out of four had launched a new IT
tool in order to make the processes more efficient.

Three out of four current non-merger cases showed no sign of the negotiating lawyer
while it was partly identified in one. This is an apparent difference to the merger
sample, in which the negotiating role continued to play a role in post-mergers, although
less pronounced than in pre-mergers. This difference might suggest that a merger, to a
higher degree than a non-merger, has to deal with the complexity of employment
contracts and collective agreements stemming from different organisations and
countries, leading the HR function in mergers to play the negotiating lawyer role (e.g.
as in OscarPapa and Univic). It was earlier noted that the negotiating lawyer role was
more common in Finnish merging firms than Swedish. The non-mergers are all Finnish
and still do not seem to emphasise the negotiating lawyer role. All Finnish
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organisations are obviously subject to the same legislation, and the industries
represented in the non-merger sample are the same as in the merger sample. Hence,
the administrative heritage, which is the third most frequent influencing factor
regarding the negotiating lawyer role (after legislation and impact of other
corporations) appears to be the factor that best explains the variances in the presence
of the negotiating lawyer role. In the interpretation of the research findings it needs to
be kept in mind that the data sample is small and thus the generalisability very limited.

None of the non-merger cases showed any signs of an employee advocate. The findings
are not surprising as the merger sample has indicated that the employee advocate role
is not given much attention.

The business partner role was identified in the current phase of two out of four non-
mergers (X-ray and Yankee), while no such role was found in the early stage of the non-
mergers. Hence, an increase in the appearance of the business partner role has taken
place both in the merger and non-merger settings, which might forecast a trend
according to which the business partner role continues to gain land during the coming
years in HR functions in general. Above it was argued that HR functions that take an
active stance in the merger integration are more likely post-merger to play the business
partner role than functions that remain more passive. Within the non-merger sample,
the X-ray HR function has contributed to the structural reformulations of the
organisation, whereas the Yankee HR function is run by a newly appointed HR director,
who most recently worked in Nokia’s HR function. The findings suggest that the HR
function can develop its role to become strategic.

Over all, changes within the HR function have occurred in the non-merger sample as
well as in the merger sample, and moreover the changes largely resemble those of the
merger cases. The median for how many HR roles a current non-merger HR function
plays is three roles/HR function, while it is one for the early stage non-merger HR
function. Hence the non-merger sample appears to have gone through the same
development as the HR functions within the merged cases.

How can the similarities between these two groups be explained? A closer look at the
four individual HR functions of the non-merger sample suggest that three of them have
changed quite significantly between the early and current stage, while one has
remained unchanged. The organisation of the HR function lacking changes had not
during the studied period of time experienced any managerial changes nor any
organisational restructurings. The three other organisations had, however, experienced
different kinds of changes that seem to have triggered changes also within the HR
function. My finding is consistent with Monks (1993:37), who argued that organisations
that are experiencing a great deal of change as a result of technological upheavals or
rationalisation programmes are also adopting more complex ways of dealing with
human resource issues.

Organisational change seems to have an effect on the HR function to perform more

strategic roles. However, it needs to be noted that the organisational change does not
automatically make the HR function more proactive. My study shows that those HR
functions that have developed into business partners have taken a proactive stance in
the organisational change process.

A merger constitutes a change setting, often a sudden and quite dramatic event, which
gives rise to a number of other changes. The merger setting is, however, not the only
change raising situation an organisation can be subject to. The major change triggers of
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the non-merger organisations appear to have been 1) a severe financial crisis and the
appointment of a new HR director, 2) a complete strategy reformulation including
restructuring of the organisation initialized by a newly appointed CEO and the
subsequent appointment of a new HR director, and 3) the change of HR manager as a
consequence of the board of directors’ wish to have a more modern HR function. The
finding supports the argument according to which the key individuals, i.e. the CEO and
the HR director, are essential for the shaping of the HR function.

In addition to these three critical contexts, which appear to have been of decisive
importance for the role of the HR function in non-mergers, the study shows that the
non-merger HR functions are also affected by other influencing factors. The
administrative heritage appears to have affected 14 out of 19 pre-merger organisations,
four out of 11 post-merger organisations and one out of four current non-mergers. A
further assumption is that the administrative heritage was a determinant of all non-
mergers at an early stage. Hence, the decrease of importance of administrative heritage
appears to be somewhat larger in the non-mergers than in the mergers. The sample is
small and far-reaching conclusions cannot be drawn. Nevertheless, the differences
could be explained by the assumption that people working in a merger are more
resistant to changes than others, possibly because of the risks that are linked to the
changes, such as lay-offs. Also, those involved in a merger are suddenly forced to
cooperate with people who probably previously have been regarded as competitors.
This in turn might affect the willingness to change the routines, as one might be more
hesitant of accepting changes that are initiated by the previous competitor, than
changes that oneself has been designing.

The argumentation is in line with the findings from previous M&A research, which has
pointed out the dilemma of employees being resistant to the changes that a merger
entails. For instance Buono (2003) stated that the disruption caused by merger
integration entails a number of dysfunctions and negative reactions among employees.
Empson (2001) found that employees are unwilling to share their knowledge with the
employees of the other merger party, and Vaara (2001) pointed out that especially
horizontal mergers, which combine two former competitors, are likely to experience
problems when decision-making is affected by fear and anxiety.

A quote from the data that illustrates the contrapositions of the two merged parties:

CFO Juliet: According to them [India people], Juliet resembled a sluggish state-owned
cooperation, without any dynamic, whereas we perceived them as dusty old people who have
never seen anything change.

Although the decrease in importance of the administrative heritage was larger in non-
mergers than in mergers, also the merger sample experienced a downshift in its
importance, as pre-mergers were more likely to be affected by the administrative
heritage then post-merger HR functions. The study suggests the general decrease to be
a consequence of the organisational changes that all studied organisations have
experienced. Nevertheless, as noted above the result suggests that it is difficult for the
HR function to get rid of old routines. Almost half of the HR functions of the post-
merger organisations were still affected by the administrative heritage.

5.5. The applicability of the conceptual framework

In chapter two I presented a conceptual framework that to a large degree builds on

previous work by Tyson and Fell (1986), Storey (1992), Monks (1993), Ulrich (1996)
 205

and Ulrich and Brockbank (2005a). The framework consists of two dimensions and five
roles. The analysis made in this study has so far built on that framework, as I have tried
to map the studied HR functions in accordance with the five suggested roles. It has
been possible to find evidence for all five roles defined in chapter two and the
dimensions of the framework have also proved relevant. Thus I argue that the
framework is a useful tool for studying the roles of the HR function.

The framework nonetheless has some limitations that need to be considered. There
have been challenges related to the identification of specific roles in each of the case
companies, and challenges concerning placement of the HR role in the two dimensional
framework (strategic-tactical and proactive-reactive).

Identification of roles. In my study I found evidence for all five roles defined in
chapter two, but to varying degrees. The existence of the employee advocate and the
business partner roles is not as prevalent as the existence of the three other roles
(process engineer, negotiating lawyer and strategy implementer).

In the theory chapter it was noted that there is a need to group or cluster the HR
activities to create HR roles. These role descriptions can then serve as a tool for
analysing the HR function from a role perspective. However, the classification of a
certain HR activity into a specific role is not straightforward. For instance, investments
in competence development might be regarded as part of both the strategy
implementer role and the employee advocate role, depending on the purpose/focus of
the activity. A strategy implementer is likely to cater for competence development that
supports the business strategy, while an employee advocate also has the employees’
interests in mind (see e.g. Ulrich 1996). Further, formal competence development
activities such as management training programs may also be part of the process
engineer and business partner roles. The criteria for identifying a certain HR activity as
part of a certain role should thus be further clarified in future research. Despite these
challenges in identifying specific roles, my study found evidence of the five roles.

My study found evidence of all four quadrants of the matrix, i.e. of HR roles being
tactical and reactive, tactical and proactive, strategic and reactive, and strategic and
proactive. The two dimensions used in the pre-understanding framework (tactical -
strategic and reactive - proactive) may, however, correlate to some degree. Figures 6-40
in chapter four, which present the HR roles of the case organisations show that the
distribution of identified roles is not equal throughout the matrix. The roles are mostly
identified on the reactive side of the matrix, with an emphasis on reactive and tactical
roles providing some indication that the roles played by the HR function may fruitfully
be mapped in a simplified two dimensional space. I will return to this below.
Nonetheless, the two dimensions are – if not completely orthogonal – at least
sufficiently independent for the framework to serve as a useful conceptual tool.

Placement of the roles in the framework. The placement of the roles along the
dimensions is yet another challenge. All five roles are at least partly defined with
reference to a certain set of HR activities. The two strategic roles (i.e. business partner
and strategy implementer) were also defined with reference to one of the dimensions of
the matrix. The business partner is by definition a proactive and strategic role, while
the strategy implementer is defined as reactive and strategic. In contrast, the three
remaining roles (employee advocate, negotiating lawyer and process engineer) are
defined with reference to certain sets of activities not directly related to the dimensions.
As a consequence, placement of the latter roles within the two-by-two matrix is not
evident. Based on the evidence in the present study, it is often difficult to make an
 206

unambiguous conclusion regarding whether the process engineer, negotiating lawyer

and employee advocate are to be seen as tactical or strategic and reactive or proactive
roles.

It was noted above (section 5.1) that there may be shifts in the strategic importance of
the HR activities that the roles are composed of. Also, the level of proactivity vs.
reactivity of HR activities may vary. Hence, my initial positioning of the roles (see
chapter two) on the two dimensions did not always reflect the data. For instance, an
activity that according to my conceptual framework belongs to a tactical role for the HR
function may in a certain context be of strategic importance. According to the reviewed
literature, for example implementation of an IT tool for HR record keeping would be
seen as an activity that belongs to the process engineer role and be viewed as reactive
and tactical. Nevertheless, in a certain context the activity maybe of strategic
importance for the organisation, or it may be performed proactively.

According to my study, the roles thus tend to move around on the two axes. The finding
reflects the complexity of the HR function at the same time as it leads to questions
about the assumptions that I made at the outset (see chapter two) concerning
placement of HR roles in the matrix. My findings suggest that rather than assuming
that a certain HR role is placed in a certain quadrant, the placement of the roles should
be viewed as an empirical question. The dimensions are regarded as fruitful as long as
the placement of roles is flexible.

My framework differs to a varying extent from those by Tyson and Fell (1986), Storey
(1992), Monks (1993), Ulrich (1996) and Ulrich and Brockbank (2005a), which it builds
on. Being a two-by-two matrix, my model resembles in particular the frameworks
presented by Ulrich (1996) and Storey (1992), and I argue that the critique I have
presented in this section concerns those frameworks as well. Caldwell (2003) among
others, have pointed out that the frameworks of both Storey (see chapter2.2.2) and
Ulrich (chapter2.2.4) neglect the complexity of HR functions. Having tried to map the
studied HR functions into my pre-understanding framework, I agree that the clustering
of activities is problematic. My study does not reflect on the extent to which the critique
concerns the one dimensional models (Tyson and Fell 1986; Monks 1993), as it is
beyond the scope of this thesis to analyse the data based on the individual previous
frameworks. Perhaps as an indication of the above discussed problems, Ulrich and
Brockbank (2005a) have retreated from matrix-thinking as they present five different
roles without prescribing them given places in a matrix.

5.6. The emergence of a new model

The purpose of the study has besides the identification of HR roles been to identify
factors influencing the roles. The approach as described in chapter 1 was to build a
conceptual framework based on the extensive number of influencing factors identified
in previous work. I also wanted to remain open to additional factors and patterns
emerging from the data and stay sensitive to any insights that may emerge from the
study. Earlier in this chapter it was noted that seven factors that were not discussed in
chapter two have arisen from the data (i.e. consumer behaviour, demography,
organisational stability, organisational structure, type of workforce, HR’s involvement
in merger integration, and understanding of and attitude towards the other
organisation). Most notably, in accordance with the discussion in chapter two, my
study found evidence that the relationship between top management and the HR
function has an impact on the HR roles. The evidence suggests that this relationship is
 207

of crucial importance for the evolvement of the HR function. Next I will discuss a new
model that emerged from the data describing this relationship, and which may shed
light on changes over time in the roles of the HR function.

While the object of analysis in this study is the HR function, the findings suggest that
the role of the corporate HR director, and his/her relationship with the CEO and more
generally the top management, is of crucial importance for the role of the entire HR
function. As the leader of the HR function, I regard the HR director to be a key actor of
the function and I argue that his/her actions represent the function as a whole. The
CEO represents the management group, being its key actor. This section presents a
model that examines the relationship between the HR function and the top
management – with special reference to the HR director and the CEO. The model
builds on Truss et al.’s (2002) argumentation concerning the relationship in question.

The pre-understanding of my study included a set of individual factors that were

assumed to have an impact on the HR function. These were the attitude of the CEO/top
management team towards HRM in general, as well as the competence and the
reputational effectiveness of the HR director/function. In my study all these factors
were identified as important influencing factors.

According to the findings of this study, both the expectations of top management
regarding the HR function and the competence of the HR function are crucial for the
role of the HR function. Thus, the relationship between these two seems to contribute
the most to our understanding of the HR function. The role expectations of the first
group and the role performance of the latter appear to have a tendency to co-exist. The
framework below illustrates the relationship between the role expectations and the role
performance. The model builds on Tsui (1984), who argues that a role is created
through the interplay between the expectations held by the role-set and the
performance of the focal person. An important finding in this study is that there seems
to be only one crucial role-set that affects the HR function, i.e. the CEO and/or the top
management. Employees are not regarded part of the role-set, as their expectations do
not appear to have an influence on the HR function39.

HR Echo: ... It all comes down to the mindset of the CEO.

To this respondent’s comment I would add the corresponding importance of the

performance of the HR function. The importance of the performance of individual HR
specialists has been recognised by Ulrich and Brockbank (2005b), who separate the
role of the HR leader from other HR functional roles. They stress that the leadership
within the HR function is important for the credibility of the function (2005b:28).

The above described expectations and performance are analysed on a single dimension
ranging from tactical to strategic. The dimension corresponds to Ulrich’s (1996)
dimension reaching from day-to-day/operational focus to future/strategic focus and
Monk’s (1993) dimension from simple to complex. The dimension is moreover the
same that Storey (1992) used in his framework, and it was also used as one of the
dimensions in my conceptual framework in chapter two. The tactical-strategic
dimension is the most commonly verified dimension in research on the HR function.
According to my findings, the role expectations will correlate with the role
performance, and therefore the bulk of the HR functions are likely to be situated within
the grey area of the figure (no 50).

39 The methodological concern of this finding is further discussed in section 6.2.1.

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Although I argue that the model as such has risen inductively from the data, the
elements – role theory, the importance of the relationship between CEO and HR
director as well as the dimension strategic-tactical – were discussed in chapter two. The
contribution lies in how these elements are linked together to form a model that
increases our understanding of the dynamics of HR roles and role changes.

strategic

Top management’s
role expectations

tactical
tactical strategic
HR function’s role performance

Figure 50 Role set theory in the context of the HR function

My study indicates that in order for the HR function to shift role from tactical to
strategic or vice versa, both the expectations and the performance need to change. The
study suggests that a shift in expectations and performance are likely to occur as a
consequence of new appointments. A new CEO will have other kinds of expectations
than the previous had; a new HR director will perform differently than his/her
predecessor.

If the expectations and the performance do not balance, the relationship is likely to be
under pressure to change. A top management with higher strategic expectations on HR
than HR manages to deliver is likely to either force the HR function to make a more
strategic contribution or replace the HR director with someone with a better track
record and a higher perceived competence.

Management Kilo: Our new CEO has given HR even more time than our former CEO did.

HR Hotel: Our CEO is more interested in the work of the HR function than his predecessor was.
He [the CEO] is very interested, and hence puts a lot of pressure on us [the HR function]. HR is
forced to do a lot of work, and difficult tasks. HR is perceived to be a function that is needed in
top management, and therefore the demands on HR are higher … At every management meeting
there is some HR issue to be discussed.
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The management group of the merged case organisation Charlie decided to appoint a
new HR director during the integration process because the former HR director did not
live up to the expectations of the management group.

Management Alpha: His [the former HR manager’s] expertise was not necessarily what the
international dimension would have required, language skills for instance.

My model suggests that a top management with lower strategic expectations for HR
than what the HR function itself aims to deliver is unlikely to give HR the prerequisites
for managing HR strategically, such as access to management meetings. The HR
director will thus either try to fight for a more strategic position by successfully
implementing and managing HR practices viewed to strengthen the competitiveness of
the firm and hence change the expectations of the management group or leave the
organisation in search of a more interesting job.

HR Bravo: Four - five months after the deal had been announced and we had worked with the
integration, trying to get things up and running, I was invited to discussions with top
management. Then, for the first time was my possible future position in the organisation brought
up. They [top management] started pondering on how the tasks possibly could be divided
between me and the other pre-merger HR director. Although they had had four five months time
to figure things out, they still did not succeed in being straight. As I had been offered another job
elsewhere I left the organisation.

The quote above illustrates the frustration that the HR director felt when she perceived
the top management to be unfocused, not to say unprofessional. As a result of the bad
management she left the organisation.

According to Katz and Kahn (1978), to whom the origins of role theory can be traced
(Wickham and Parker 2007), the interplay between role expectations and actions is a
cyclical process, which starts with the role set holding expectations for the focal
person/group (role expectations). These expectations are sent to the focal person (sent
role). The focal person’s perceptions (received role) of the role set’s expectations are
likely to influence and motivate the behaviour and action (role behaviour) of the focal
person, which will presumably be a combination of compliance and non compliance in
relation to the expectation of the role set. Next, the set will evaluate the action and form
new expectations.

In other words, the top management team, which constitutes the crucial role set of the
HR function, gives the HR function a certain role, based on their own expectations. The
HR function that is affected by the expectations will then take a role which is
presumably in line with the expectations. Nevertheless both under and over
performance compared with the expectations might occur.

The research data shows evidence of HR functions that have managed to over perform
and thus changed the expectations of the role set.

Management Tango: … I want to be frank about the fact that the HR function that Erik [HR
manager] established grew much bigger and operative than I had ever thought.

HR Kilo: Pekka [former CEO at Kilo who became CEO at KiloLima] has said in retrospect that he
would never have thought that the HR function could take such a role that has been taken during
the KiloLima era. He never saw anything like this during the Kilo-times.

Hence through its action and behaviour, an HR function that desires to change its own
roles can create the prerequisite for the change, the prerequisite being a shift in the role
set’s expectations. The HR function needs to earn its role, and for the role to be
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fulfilled, the top management team needs to assign it. Based on the evidence from the
case organisations, my interpretation is that it is difficult for the HR function to change
the expectations of the management group, to persuade to expect that HR will add
value on the bottom line. Regardless of the examples above, the majority of case
organisations did not reveal such a development.

Based on the study, it appears that it is difficult to change the preconceived notion
within some management groups of the HR function as an expensive and necessary
evil. The statement below, which discusses the top management team’s priorities
during the merger integration, suggests that the management team of November
valued the sales function more than the HR function, as the former generates money.

Management November: … the HR function was not on the agenda. One of the most important
things was the sales unit, because it is so extremely sensitive. It reflects the result of the company
immediately if the sales do not work.

The inclusion of the HR director in the top management team partly reflects the role
expectations of the HR function held by top managers. High expectations might reflect
a positive attitude towards the HR function which in turn might increase the likelihood
of HR being part of top management. The opposite - that low expectations of the HR
function forecasts the exclusion of HR from the top management team - is also
probable.

HR Tango: It’s evident that in the case the management group does not regard the HR manager
to be competent enough, they won’t include him at top level.

Nevertheless, the fact that HR has a seat at the table does not automatically mean HR is
in high regard. For instance in MikeNovember, the HR director was a member of the
management group only to respond to the duties established by the European Works
Council, which was statutory by law. No strategically important input by the HR
director was reported. My interpretation is that having a seat at the table facilitates the
gaining of a strategic role. The top management membership both reflects a positive
attitude towards the HR function and implies access to corporate strategic decision
making.

Some of the respondents argued would nevertheless argue that top management
membership does not add anything particular to the role of the HR function.

HR Juliet: The membership is not a key question. Although I am not officially a member, the
door is always open for me.

HR Victor: I have had enough interesting and challenging tasks as it is, without belonging to top
management.

The quotes reflect the findings made by Hope Hailey et al. (1997). They found evidence
of people management issues being integrated within the business strategy also in some
instances where there was no formal presence of the HR function in the executive team.
Thus they argued that membership “would be an irrelevant criterion for assessing
access to corporate strategy” (1997:10). The finding may, however, be most relevant in
organisations where line managers are largely responsible for HRM and the co-
operation between line and HR is close.

As a contrasting reflection, one respondent believed that the membership signals a

certain attitude towards HR.
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Administration Foxtrot: It [inclusion of HR in top management] has symbolical value and

meaning. Of course it would have been good and beneficial and indeed it would have had
significance [to be a member of the management group]. But, I still cannot think I would have
been able to do anything differently or better as an official member of the management group.

There is an ambiguity in the statement above, as the respondent on the one hand thinks
it would have made a difference to be part of top management, yet on the other hand
feels a need to defend the prevailing system. It could be argued that the quotes above
are face savers; that HR managers do not want to admit that they are hoping for
something that they do not get. The argument would be supported by the fact that
expressions in academic articles such as HR’s stairway to heaven (Guest and King,
2004) suggest that HR managers long for change, for more power. Nonetheless, based
on this study, the importance of the administrative heritage in the HR roles is evident
and it seems to suggest that many HR managers tend to stick to old routines. They
might be content with the current state and do not necessarily strive for anything else.

HR Juliet: … few people are ready to let go of old routines in favour for something new. It’s
difficult to see the upside with new routines when the old ones have worked just fine for years.

Changes in the roles played by the HR function appear to be common in organisations

that have changed HR directors. Thus the study found evidence of two different
phenomena regarding change – HR functions that are hindered by a traditional
administrative heritage are reluctant to change, while HR functions that are given new
blood in terms of a new HR director are more likely to strive for development. A change
of HR director may imply a push away from the administrative heritage of the function,
which makes further changes within the function more likely to occur.

Below, three figures illustrate the development of the HR function in three different
mergers. The figures show that there is a natural tendency for a balance between
expectations and performance to occur.
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strategic
Bravo pre-merger
HR function

Top management’s
role expectations

Charlie post-merger
HR function

(Bravo HR director
Alpha pre-merger
leaves the organisation)
HR function
tactical
tactical strategic
HR function’s role performance
Figure 51 The development of Charlie’s HR function

The first example (figure 51) shows how the low expectations of the management group
on HR’s role performance had a demotivating effect on the HR director, at the same
time as the high performance of the HR function led to increased expectations among
the top management group. To begin with, the Alpha pre-merger HR function was
tactical, while the Bravo pre-merger HR function was strategic. The management group
of Alpha took the lead in integration, and showed little interest in the HR function in
general. The ambitions of Bravo’s HR director exceeded the top management’s
expectations, which soon led the HR director to leave the organisation, as she did not
feel her work was supported.

HR Bravo: No matter what you are doing, people want to be seen and confirmed, it regards
everyone.

Meanwhile the management group of Alpha, which had changed its name to Charlie as
a symbol of the merger, had noticed some of the potential of the HR function. The
management group realized the former Alpha HR function needed to be updated and
hence moved the pre-merger HR director to other duties while a new HR director was
externally appointed. The performance of the post-merger HR function subsequently
stabilised on a level that corresponded to the top management team’s increased
expectations towards the HR function.

The Charlie case shows that the understanding of the contribution of the HR function
in the other organisation that followed the merger can have an impact on the
expectations of HR’s role-set, i.e. the CEO and top management group.
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strategic

KiloLima post-merger
HR function

Top management’s
role expectations

(Increased performance
led by the new HR
director leads to
Kilo pre-merger increased expectations)
HR function

tactical
tactical strategic
HR function’s role performance
Figure 52 The development of KiloLima’s HR function

The second example describes a situation where the HR function succeeded in gaining
increased reputational effectiveness as a consequence of its high performance.
Consequently the expectations held by the role-set grew. When the KiloLima merger
took place, Kilo had a tactical HR function, while Lima virtually lacked an HR function
as HRM was handled by line managers. The post-merger HR director of KiloLima
quickly took a lead of the integration process. Although he was held in high regard by
the management group, the initial interest of top management in the HR function was
low. The performance of the HR director made an impact on the top managers, who
soon started expecting more from the HR function.

HR Kilo: Pekka [former CEO at Kilo who became CEO at KiloLima] has said in retrospect that he
would never have thought that the HR function could take such a role that has been taken during
the KiloLima era.

The figure above (no 52) illustrates how the performance of the HR function first
became strategic, and how the management responded by increasing its expectations,
and thus the balance was reshaped.

The third example (figure 53) shows that the change of key players in top management
may change the expectations on the HR function, which ultimately leads to a change in
the performance.
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strategic

(new HR director appointed)

Hotel post-merger
Top management’s HR function
role expectations

(new CEO
appointed)

Golf pre-merger
HR function
Foxtrot pre-merger
HR function
tactical
tactical strategic
HR function’s role performance
Figure 53 The development of Hotel’s HR function

The pre-merger HR functions of Golf and Foxtrot resembled each other, both being
tactical. The change of CEO led to higher expectations of the HR function, as the new
CEO regarded the HR function to be a top managerial level function. Next, the HR
director was changed to someone with higher ambitions and a better track-record.
Above, the figure first shows the increased expectations, and second the increasingly
strategic performance.

Taking the discussion a step further, I argue that the model can be used not only to
explain the tactical vs. strategic roles of the HR function in general but also to explain
the level of strategic importance of various HR activities. Top management’s
expectations of activities such as management development and change management
are argued to influence the level of strategic importance of the activity. Thus the model
could be a useful tool for analysing the dynamics of different HR functional activities.
As an example of an activity, compensation can in its narrow functional form imply
management of salary disbursement, while in a more sophisticated form it includes the
design and implementation of incentive schemes that support the strategic ambitions of
the firm. Thus, the level of strategic importance might vary for different activities. By
analysing a set of HR activities within different HR functions we could increase our
understanding of different HR profiles. In future research it would be interesting to
study if and how different HR activities within one HR function are related to each
other in terms of their level of strategic importance.

Truss et al. (2002) brought up the discussion on role-theory in the context of HRM. My
study builds on their work and adds some new elements to the discussion. First, I
discuss the role expectations and performance on a dimension ranging from tactical to
strategic. The role-theory is thus put into a model which creates a tool for
understanding the HR function and changes within the function. Second, I suggest the
role-theory model could be used as a tool to analyse different HR activities. According
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to the findings of my study, role theory is a useful tool for understanding the HR
function and I call for more research on the HR function using role theory.

Having discussed the relationship between the HR function and top management from
the role-theory perspective, I acknowledge that the relationship can be analysed from
other perspectives as well. Truss (2009) finds that social capital has an impact on HR’s
role. She argues that there are formal and informal ties between HR and line managers
at all levels, which in turn create an environment for information sharing and influence.
The common definition of social capital is “the sum of the actual and potential
resources embedded within, available through, and derived from the network of
relationships possessed by an individual or social unit” (Nahapiet and Ghoshal,
1998:243). Nahapiet and Ghoshal (1998) furthermore divide the concept of social
capital into three inter-related dimensions – structural, relational, and cognitive.

Above, the formal relationship between the HR function and top management was
discussed in terms of HR’s top management membership. This study indicates that
after the merger the HR director is more likely to have a seat at the table than she/he
was before the merger. Likewise, according to my findings the HR director of the vast
majority of post-mergers and current non-mergers report to the CEO. In the early days
and pre-merger HR functions it was not uncommon for an HR director to report to the
deputy CEO. From a social capital perspective these formal relations can be viewed as
part of the structural dimension. The HR directors in my case organisations had
become closer to the CEO in terms of structure. As the role of the HR function
meanwhile has become more strategic it is conceivable that the structural dimension of
the social capital affects the HR function, so that the closer the HR director is to the
CEO in terms of structure the more likely is the HR function to play a strategic role.
Although the perspective has been switched from role theory to social capital, the
argumentation is the same as above. Related to the cognitive dimension of social
capital, this study shows that HR managers and top managers often regard a ‘common
language’ a prerequisite for HR managers to become strategic partners. The common
language is the business language used by top managers.

EVP Alpha: Why include someone in the management team, who does not understand the
‘language’? He would have done nothing but twiddle his thumbs.

HR Papa: The biggest challenge for HR is to speak the same language as line managers do.

Based on the findings of my study, it appears to me that the more the HR director
resembles the top managers in terms of way of thinking and talking, the more likely
he/she may be to play a strategic role. Hence, the stronger the cognitive dimension of
the social capital the more likely is the HR function to play a strategic role. The more
HR specialists and line managers are alike, the more likely they are to socialise and
build trust and thus be part of each others’ relational social capital.

Although two different concepts, in this particular context I regard the discussion on
social capital to be related to role-theory. Strong social capital might at least to some
extent be a result of HR’s high reputational effectiveness. HR’s high performance
increases the expectations held by managers and little by little the top management’s
commitment to and trust in the HR function improves. Consequently, the dimensions
of social capital, the cognitive dimension in particular, might change and grow
stronger. Another potential scenario is that the social capital comes first and the
strategic role follows. This might be the case when for instance a line manager who has
worked closely with the CEO is appointed head of HR. There seems to be much room
for further research on the relationship between social capital and role theory.
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6 CONCLUSIONS

This thesis has studied the evolving roles of the HR function in the context of large-
scale mergers. The aim of the present study was to examine the roles played by the HR
function in the context of mergers and thus to understand what happens with the HR
function in such a change environment, and to shed light on the underlying factors that
influence the change. The main research questions were the following:

1. What are the roles played by the HR function before the merger, and after
the merger?

2. Which factors affect the roles played by the HR function?

The theoretical part of the study summarised previous work on HR roles, proposing a
conceptual framework consisting of two dimensions (tactical-strategic and reactive-
proactive) and furthermore including five HR roles, namely: the process engineer, the
negotiating lawyer, the employee advocate, the strategy implementer, and the business
partner. Based on previous research a list of approximately 20 influencing factors was
presented. The factors were divided into three contexts – an outer context comprised of
external factors, an inner context consisting of organisational and individual attributes,
and a merger context which considered elements that are specific to the merger setting.

The empirical study was partly of explorative nature and qualitative methods were
perceived to be most appropriate. A case study approach was applied including ten
mergers and four matching non-mergers in the data set. A total of 29 respondents were
interviewed using semi-structured in-depth interviews.

6.1. General conclusions

Conceptual framework for HR roles. This thesis has tried to identify HR roles
and used a conceptual framework (matrix) consisting of two dimensions. The
framework is the end product of an extensive overview of previous work on HR
functions, and according to the findings of my study the framework is a useful tool for
analysing HR functions. Evidence is found for all five roles in the framework, and the
two dimensions of the matrix were found to be orthogonal enough to be relevant.

One challenge with the framework is that all the five roles presented within the
framework cannot be prescribed fixed locations on the two dimensions of the
framework (strategic-tactical and proactive-reactive). Two of the roles (strategy
implementer and business partner) are defined by the dimensions, while the remaining
three roles (negotiating lawyer, employee advocate and project engineer) are defined
based on other criteria, such as the activities they are comprised of. These roles may
therefore move around in the framework so that a role that is tactical in one
organisation is strategic in another.

The initial assumption that the roles are always situated in their prescribed places is
problematic, as according to my study variance is found between organisations and
within organisations over time. Although the studied case organisations are fairly
homogeneous in terms of size, nationality, merger experience and industry the HR
functions appear to represent a much higher degree of diversity than the organisations
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as such do. The framework may be a useful tool as far as it is acknowledged that the HR
roles can change places.

Changes in the roles. My study set out to determine the roles played by the HR
function before and after the merger. In my study I found evidence of all five roles
defined in chapter two, both before and after the merger. The existence of the employee
advocate and the business partner roles is not as prevalent and frequent in the studied
sample as the existence of the three other roles (process engineer, negotiating lawyer
and strategy implementer). Despite the challenges of role identification, certain
patterns of role change are found. The thesis concludes that change occurs, as the study
finds evidence for the roles of the HR function to shift over time. Generally speaking,
the trend is for the HR function to become more strategic. Also, in organisations where
development has not yet been evident there is a tendency to strive to become more
strategic with the intermediate aim of becoming more efficient. The findings of this
study support what has already been said by Monks (1993) and Truss (2009): the
administrative role, in this study referred to as the process engineer, does not cease to
exist as the HR function becomes more strategic, instead it is found to be a cornerstone
on which additional roles rely. The HR function is found to play strategic roles only
when the HR administration runs smoothly. In chapter 2.4.3 the study presented a
framework in which the five different roles were presented as non-hierarchical. The
findings of the study however suggest that there is a hierarchy.

The strategy implementer role has gained ground – it appears to be the fruit of the
development that has taken place. One possible explanation of the shift is the increased
efficiency of the tactical roles. Thanks to the increased use of IT tools and HR service
centres an increased amount of HR resources can be allocated to more strategic tasks.
In line with my findings, Torrington et al. (2008) claim that the outsourcing of tactical
tasks enables the HR function to concentrate on developing the own role. Both the
competence of the HR specialists and the attitude of top management regarding the HR
function were also found to influence the strategic roles.

Over time the HR function has become more versatile. An HR function that played the
process engineer and negotiating lawyer roles before the merger is likely after the
merger to play the strategy implementer role in addition to the two previous ones. In
this study, those HR functions that played the business partner role also played the
strategy implementer and the process engineer role, and in most cases the negotiating
lawyer role as well. The findings concerning the negotiating lawyer are somewhat
ambiguous. In some organisations the role was found to be increasingly important as a
consequence of the organisations’ globalisation process; in others the role was argued
to be shrinking. The conclusion made in this study is that the process engineer,
sometimes together with the negotiating lawyer, form a base upon which the more
strategic roles build.

Factors influencing change. The study also aimed at answering which factors affect
the roles played by the HR function. In chapter two, a number of potential influencing
factors were listed, among others a set of individual factors. The attitude of the
CEO/top management regarding HRM on the one hand, and the competence as well as
the reputational effectiveness of the HR director/function on the other hand are found
to influence the majority of the studied HR functions. Especially the business partner
role is regarded to be highly dependent on the attitude of the CEO. The finding is
consistent with Tanure and Gonzalez-Duarte (2007), who found that the perception
held by the CEO and top management regarding the importance of people management
is crucial for HRM in radical change situations. My study concludes that the
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relationship between the HR function and the top management team is important for
the role performance of the HR function. My study suggests a new empirical model
which explains the impact of this relation on the HR function (see section 5.6.).

The merger integration process is found to be a window of opportunity for the HR

function. The HR functions studied, which during integration took a leading role,
expanded their own role and went from being mostly administrative before the merger
to playing a business partner role after integration. Comparing the merger cases with
the matching non-merger sample it can nevertheless be concluded that the roles played
by the HR function in the post-merger sample are largely the same as in the current
state of the non-merger sample. This suggests that the impact of the merger on HR
appears to be limited; looking at the other side of the coin, a non-merger might
experience equally big changes as a merger. A merger does imply that the organisation,
and the HR function as part of it, is restructured, which in turn leads to the post-
merger HR functions being different from the pre-merger functions. The reason why
the merger sample does not substantially differ from the non-merger sample seems to
be that also non-mergers had experienced changes and restructurings of equal
magnitude.

The studied HR functions that profited from the window of opportunities mergers as
well as other organisational restructurings might offer the HR function had been
proactive in the change process. In terms of activities they for instance suggested and
implemented integration teams, key recruitments and change communication. Evans et
al. (forthcoming) argue that it is the responsibility of HR to ensure a sharp focus on
people and leadership issues, making sure that the transitional organisation and teams
are in place on day one. Evidence from my study nevertheless shows that the majority
of the studied HR functions remained mainly reactive during the organisational change
process and did not pursue any remarkable changes.

On an organisational level, the administrative heritage is the single most important

factor that affects the HR role. Administrative heritage is perceived to hinder change.
Especially within mergers, the administrative heritage appears to be a key question. My
findings are in line with Bartlett and Ghoshal (1989) who argue that administrative
heritage is a barrier to change in HRM as it cannot be changed quickly. Within the
external context, other corporations and the economic cycle were identified as
influencing factors. Nevertheless, in line with Hope Hailey et al. (1997) my study finds
that the role of the HR function is to a higher extent influenced by internal than
external factors.

Empirical model. The study presents a new model (section 5.5), which illustrates the
impact of the relationship between the top management team and the HR function on
the role of the HR function. The model builds on Truss et al. (2002) who brought up
role theory in HRM research. My model examines the role expectations of top
management and the performance of the HR function on a dimension reaching from
tactical to strategic. The role theory is thus put into a model which creates a tool for
understanding the HR function and changes within the function. My contribution lies
in linking role theory to the strategic-tactical dimension and creating a model. With the
help of the model we can increase our understanding not only of the role the HR
function plays at a given point of time but also on the changes that take place within the
function over time. Also, I suggest that the role-theory model could be used as a tool to
analyse different HR activities.
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My model examines the HR role in general on a single dimension reaching from tactical
to strategic. This dimension is not only derived from the data in this study but also in
line with all the five frameworks the study builds on. Hence, it is argued that the tactical
- strategic dimension has received substantial support over the years.

While previous frameworks have tried to grasp the activities of the individual roles
played by the HR function, this model does not cluster HR activities. The existing
frameworks on HR roles presented in chapter two (Tyson and Fell 1986; Storey 1992;
Monks 1993; Ulrich 1996; Ulrich and Brockbank 2005a) are descriptive, in distinction
to my model that is explanatory. My model explains why role change occurs. Hence my
study presents a model which opens up for further research on the HR function.

Change paths. The study shows that change occurs as the HR roles tend to be more
strategic after the merger than before. Nevertheless, the HR functions appear to remain
mainly reactive. As the study includes the analysis of two different points of time only
and is based on data collected at one moment of time, I have only limited data on the
change path the HR function undertakes. This limitation none withstanding, in line
with Tyson and Fell (1986) as well as Monks (1993) I argue that a possible path would
be to first build a tactical and reactive function, then continue building the function to
include also a strategic and reactive role and thereafter move towards more proactive
roles. My study found evidence for the first step, while it lacks data on the possible
development thereafter. Nevertheless, my study finds that certain HR functions
manage to move fast from being tactical and reactive to becoming strategic and
proactive. Based on the data it is difficult to tell whether these HR functions have
experienced an intermediate phase when being strategic and reactive.

Performing a reactive and strategic role might increase the reputational effectiveness of
the HR function which I argue is a prerequisite for gaining a more business central role.
Nevertheless, there is scarce evidence of HR functions moving from being reactive to
becoming proactive, without the introduction of a new HR director to the function.
Therefore the step from being a strategy implementer to broadening its field to
becoming a business partner might be a more difficult step to take than when moving
from tactical roles to strategic. Hope Hailey et al. (1997) argue that the change maker
role in Storey’s (1992) framework, which corresponds to the proactive and strategic
business partner role in my conceptual framework, tends to be only temporarily active.
The trend seems to be that HR functions temporarily perform proactive and strategic
tasks when the organisational situation calls for it because of e.g. restructurings, but
return to its reactive stance during business as usual (Hope Hailey et al. 1997). As my
study deals with the change setting a merger implies, it cannot be ruled out that the
identified strategic and proactive HR functions will, when the post-merger integration
is complete, revert to being reactive. Far more research is needed to gain understanding
of the path HR functions are likely to undertake.

6.2. Limitations and implications

6.2.1. Limitations

Like all research, this study suffers from certain limitations. The study was built on a
thorough literature review. The overview of previous work concerning the roles an HR
function might play was extensive. The explanatory part of the study, which discusses
factors influencing the roles, is eclectic rather than building on one or more
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organisational theories. As a limitation the theoretical point of departure of the study

was somewhat uneven as the descriptive part was more well-informed than the
explanatory part.

With hindsight, the terminology that I used during the interviews is to some extent
ambiguous, which implies that different respondents might have interpreted and used
the terminology in different ways. At first glance the dimension tactical-strategic
appears to be quite self-evident, although the analysis shows that the meaning of the
word strategic is likewise subject to various interpretations. What kind of HR role is
truly strategic? When is it of strategic importance to cater for e.g. executive training,
when is it not and what more exactly makes HR activity correspond to the business
partner/strategy implementer roles vs. some of the other roles? Also I find the reactive-
proactive dimension to be problematic, as I believe the HR function may proactively
react to the business situation, e.g. make an initiative as a reaction to something. As
stated above, the classification of HR functions and HR activities into different roles is
problematic. The study might have gained from having a clearer definition of these
concepts prior to the data collection.

It should be noted that the data were collected at one point of time only. The
interviewees were asked to reflect on the pre-merger HR function in retrospect while
their reflections on the post-merger HR function concerned their current work. It
seems probable that respondents feel a stronger need to justify current practices than
past ones, and thus it has to be kept in mind that the findings from the two different
points of time are perhaps not entirely comparable. My finding, according to which the
HR functions perform increasingly strategic roles, needs to be considered in the light of
this limitation. The study is moreover subject to the common limitations that apply for
any retrospective study. The findings rely on the memories and post-hoc reasoning of
the respondents. One challenge of conducting research on mergers is the difficulty of
gaining access to the organisation during the pre-merger planning and to study the
merger over an extended time period – in this study it was not possible. Consistent with
Truss (2009) I call for more longitudinal research on the evolvement of the roles of the
HR function.

HR directors and other top managers were chosen as informants as they were believed
to be the persons most central to the role of the HR function. As a limitation it has to be
noted that the study does not include any other perspective than that of the top
management/HR directors. The selection of groups of respondents might have affected
the results. As a key finding I claim that the relationship between the HR function and
the top managers affect the role of the HR function. The study cannot rule out that the
finding is a consequence of the selection of respondents.

Based solely on an interview with one or two HR managers it might be difficult to

assess the actual strategic input of the HR function as a whole. The point of view of a
member of the management team such as the CEO or CFO appears to be needed in
order to assure identification of the contribution of the HR function. Hence, it should
be pointed out that the analysis made in this thesis to is some extent uneven, as the
analysis of some case organisations is based on the HR director’s perceptions only,
while others also take into consideration the viewpoints of top management.

There are other obstacles related to the data collection that affect the reliability of the
analysis. On the one hand, the HR managers interviewed might have felt a need to
boost their own role and importance in the organisation. On the other hand one cannot
rule out the opposite, that someone felt embarrassed talking about herself/himself and
 221

tried to play down their own input. The problem was partly solved by having a group of
respondents who represented the top management, but had no part in the HR function.
However, such interviews were not included in the data collection of every single case,
and I believe that my interpretation of the HR function and analysis of the data may
have been affected by whether I had made an interview with a top management
representative.

As this piece of research was conducted by a single researcher the data collection and
analysis was also made without the involvement of anybody else. The reliability and
validity of my study are therefore difficult to verify.

Furthermore the study was conducted in a limited geographical area, implying an

equally limited generalisability. Also, the number of interviews is small. Thus, a great
deal of caution is needed when interpreting the data.

6.2.2. Implications for future research

The study combines several streams of research - HR roles, factors influencing the HR
function, and research on M&As. It also opens up for a wide variety of future research.

In order to improve the understanding of the evolving roles of the HR function, the
study attempts to verify previous scholarly theorisation. My study finds evidence of the
two dimensions and the five roles suggested in the theoretical framework, but also
identifies the problems of clustering various HR activities into different roles. A new
empirical model is presented (section 5.6), which I argue to be an interesting base for
future research.

The emerging model illustrates the relationship between top management’s

expectations and the HR function’s performance. In future research, it would be
interesting to study the effects the change of CEO or HR director might have on the role
of the HR function. According to Ulrich et al. (2009), a newly appointed HR director
has a unique opportunity to shape a new agenda for the HR function.

Future studies that would deal with how the HR function can influence the role
expectations on the part of top management would make an interesting contribution to
the discussion. Also, the applicability of the model could be tested in different settings,
although my assumption is that the model might be an equally fruitful tool for HR
research in any kind of organisation, regardless of e.g. size or degree of
internationalisation.

The list of influencing factors that was first presented in chapter two and further
developed in chapters four and five is a product of this thesis. The structure of the list is
my own, but the factors included can be traced to a large number of previous studies as
well as to the findings of this piece of research. Such an all-encompassing list of factors
that influence the role of the HR function has not been presented in the HR literature
before. Previous research studying factors influencing HR have typically focused on a
limited number of factors (e.g. Baird and Meshoulam 1988; Hendry and Pettigrew
1992; Pucik 1992). This study has in many respects been of explorative nature,
especially in its attempt to identify factors that influence the HR function. Twenty-four
specific factors are listed in the findings. The definitions of those factors varies from
being well defined to less defined, and further research is needed to improve our
understanding of the influencing factors. Clear distinctions between the different
 222

factors would help us improve our understanding of how different factors interact. In
future research, the inter-relations of the influencing factors would need much more
attention. It has been noted in this study that external factors often impact internal
factors, which in turn have an effect on the HR function. However, the factors within
the internal context also seem to impact each other, which makes it difficult to identify
unambiguous causal connections. More research is needed to increase our
understanding of the inter-relations and their impact on the HR roles.

In this study data were collected by interviewing HR professionals and top managers.
In future research it would be interesting to include the perceptions of line managers,
perhaps by applying quantitative methods. The involvement of line managers in HRM
has been beyond the scope of this study, but in future research it would be interesting
to study how line managers’ involvement affects the roles played by the HR function.
Perhaps the line managers play e.g. the employee advocate role which according to this
study does not belong to the HR function’s general repertoire. Whittaker and
Marchington (2003) argue that line managers to an increasing extent regard HRM as a
natural part of their own work, while also recognising the need of an HR function
catering for specialist expertise.

Previous research on M&A integration has focused on what managers need to do to

make the integration work. For instance the need of taking into account cultural issues
has been extensively discussed (e.g. Cartwright and Cooper 1996; Stahl et al. 2004).
This study contributes to the discussion on what the merger integration implies for the
HR function, i.e. the kind of possibilities the integration offers. This angle merits
further attention. In future M&A research it would for instance be interesting to explore
the possibilities the integration phase offers other parts of the organisation.

Future research could moreover benefit from studying the merger integration phase
more closely – longitudinally – to improve our understanding of the involvement of the
HR function in that process. This study suggests that the HR function can gain a more
strategic role by actively supporting the organisation during the merger integration
process. The HR function could for instance take on the role as the integration
manager, including the management of timelines and communication. The
establishment of integration teams could also be a responsibility of the HR function.
The development of the role of the HR function is likely to vary in accordance with the
input of the HR director – an integration manager who takes the lead of the integration
implementation can gain other sorts of roles than an integration administrator who
takes care of secretarial duties. By studying different kinds of HR competencies, social
capital, the attitudes of the CEO and the specific contexts one could increase the
understanding of the mechanisms that support the HR function in its contribution to
the integration and eventually strengthen its strategic role. The proactivity of the HR
director in organisational change situations in general would also merit from more
attention with regard to the roles the HR function will become to play.

6.2.3. Practical implications

The study provides some useful insights for practitioners. First, the study reveals the
importance of the relationship between the top management team and the HR function
in the development of the HR roles. This study provides the practitioners with a new
model, which may increase their understanding of how their relationship with top
management affects HR’s role. The expectations of top management regarding HR’s
 223

performance were found to have increased. Higher expectations are argued to be a

prerequisite for the shift in the role of the HR function to become more strategic.

Second, the study shows that HR functions have become more versatile. In practice,
this implies an increased need for HR generalists, who manage the wide variety of HR
activities and processes. The HR function is under pressure to adapt its activities
depending on the prevailing organisational attributes, and therefore it is argued that
HR specialists need to play different roles at different times.

Thirdly, the administrative heritage is found to hinder the development of the HR

function. For HR practitioners the awareness of the power the administrative heritages
possesses increases their possibilities to take it into account when planning ahead the
development of the HR function. The thesis shows evidence of an HR function that
replaced HR staff to overcome the problem.

Finally, the findings show that the HR function can gain a more strategic role by pro-
actively supporting the organisation. Change settings such as merger integration and
organisational restructurings constitute a lucrative setting for increased HR
contribution. However, only a minority of the HR functions in my study proved to be
capable of making the most of the opportunity and improving its role. One thing seems
to be apparent – the HR function is given nothing for free.
 224

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APPENDIX 1 INTERVIEW GUIDE (PILOT STUDY)

The HR function in your company (today)

Formal organization: corporate/divisional/BU levels
Approx. no. of people in different units, the background of people in senior positions
Formal representation of HR managers in the organisation
Brief overview of what the different units are involved in/responsible for (e.g. business
planning, HR information, recruitment and selection, management development, HR
advice to line staff)

The merger context

In your own opinion, what phases does the merger process consist of?
Where are you now?
What were the duties of the HR function during the merger?
What was the extent of HR involvement in merger?
How would the merger have succeeded without help from the HR function?

How would you describe the roles played by the HR function in your
company? Senior managers/line managers’ expectations of HR and perceived
effectiveness?
Discussion of HR issues at a senior level?
Operational efficiency vs. strategic issues (change mgt., input in strategy
formulation/HR dimensions of strategy)

Why? How has the function come to play these roles? (At
corp./division/subs.)
Resources: HR expertise, business knowledge, formal/informal power (incl.
credibility), resources
Merger impact on HR role?
Behaviour:
-’strategic intent’ and strength of will to play certain role
-specific HR initiatives
-management development programs; HR information systems; eHR; formalization of
HR strategies; perf.mgt./compensation systems; competency frameworks
-focus of activities (strategic vs. operational)
-devolution of activities to the line
-communication and visibility of HR – how?

Additional questions
Things you see as important that we haven’t covered?
What are current (and future) challenges for the function and yourself?
(Describe a typical week)
How would you describe the roles played by the HR function in large Finnish
companies in general?
How do you explain why?
 238

APPENDIX 2 INTERVIEW GUIDE (MERGERS)

Background information of interviewee

Pre- merger
HR activities
Structure of the HR function
HR’s relations to top management
Corporate business situation
HR’s vision
Role of external consultants – cooperation with HR
Role of communication department – cooperation with HR

Merger takes place

When/how did you first hear about the deal?
When did HR become involved, what kind of tasks?
HR participated in DD?
HR activities
Structure of the HR function
HR’s relations to top management
Corporate business situation
HR’s vision
Role of external consultants – cooperation with HR
Role of communication department – cooperation with HR
HR’s routine tasks – how were they handled?

Post-merger
HR activities
Structure of the HR function
HR’s relations to top management
Corporate business situation
HR’s vision
Role of external consultants – cooperation with HR
Role of communication department – cooperation with HR

Questions to top managers

Top management’s view on HR?
In an ideal world – what would the tasks of the HR function be? What would be
focal?
How could HR support you in your daily work?
Should HR be pro-active or reactive? What is HR today?
Which factors affect HR’s role? The view of top management, the business
situation, current trends, other corporations’ HR, consultants?
What is the relationship between HR and top management?
Who within the top management guards the interests of HR?
Could the organisation benefit from having HR in top management?
Could the HR function improve its work if it had a better view of the work of the
top management?
How could HR’s input in the business be improved?
 239

Additional questions
What has changed during these years?
Which factors explain the changes/lack of changes?
How has the role of the HR function changed?
How can HR contribute to the success of the merger?
Additional comments?
 240

APPENDIX 3 INTERVIEW GUIDE (NON-MERGERS)

Background information of interviewee

10 years ago
HR activities
Structure of the HR function
HR’s relations to top management
Corporate business situation
HR’s vision
Role of external consultants – cooperation with HR
Role of communication department – cooperation with HR

5 years ago
Possible change situations?
When did HR become involved, what kind of tasks?
HR activities
Structure of the HR function
HR’s relations to top management
Corporate business situation
HR’s vision
Role of external consultants – cooperation with HR
Role of communication department – cooperation with HR
HR’s routine tasks – how were they handled?

Current situation
HR activities
Structure of the HR function
HR’s relations to top management
Corporate business situation
HR’s vision
Role of external consultants – cooperation with HR
Role of communication department – cooperation with HR

Additional questions
What has changed during these years?
Which factors explain the changes/lack of changes?
How has the role of the HR function changed?
How can HR contribute to the success of the merger?
Additional comments?
 EKONOMI OCH SAMHÄLLE
Skrifter utgivna vid Svenska handelshögskolan

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Publications of the Hanken School of Economics

176. MINNA PIHLSTRÖM: Perceived Value of Mobile Service Use and Its Conse-
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177. OGAN YIGITBASIOGLU: Determinants and Consequences of Information Sharing

with Key Suppliers. Helsinki 2008.

178. OANA VELCU: Drivers of ERP Systems’ Business Value. Helsinki 2008.

179. SOFIE KULP-TÅG: Modeling Nonlinearities and Asymmetries in Asset Pricing.

Helsinki 2008.

180. NIKOLAS ROKKANEN: Corporate Funding on the European Debt Capital Market.
Helsinki 2008.

181. OMAR FAROOQ: Financial Crisis and Performance of Analysts’ Recommen-

dations. Evidence from Asian Emerging Markets. Helsinki 2008.

182. GUY AHONEN (Ed.): Inspired by Knowledge in Organisations. Essays in Honor of

Professor Karl-Erik Sveiby on his 60th Birthday 29th June 2008. Helsinki 2008.

183. NATAŠA GOLIK KLANAC: Customer Value of Website Communication in

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184. ANNIKA SANDSTRÖM: Political Risk in Credit Evaluation. Empirical Studies and
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185. MARIA SUOKANNAS: Den anonyma seniorkonsumenten identifieras. Om

identitetsskapande processer i en marknadsföringskontext. Helsingfors 2008.

186. RIIKKA SARALA: The Impact of Cultural Factors on Post-Acquisition Integration.

Domestic and Foreign Acquisitions of Finnish Companies in 1993-2004. Helsinki
2008.

187. INGMAR BJÖRKMAN et al. (Eds.): Innovation, Leadership, and Entrepreneurship.

A Festschrift in Honour of Professor Martin Lindell on his 60th Birthday. Helsinki
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188. JOACIM TÅG: Essays on Platforms. Business Strategies, Regulation and Policy in
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189. HENRIK TÖTTERMAN: From Creative Ideas to New Emerging Ventures.

Entrepreneurial Processes Among Finnish Design Entrepreneurs. Helsinki 2008.

190. ANNIKA RAVALD: Hur uppkommer värde för kunden? Helsingfors 2008.

191. TOM LAHTI: Angel Investing in Finland: An Analysis Based on Agency Theory and
the Incomplete Contracting Theory. Helsinki 2008.
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Helsinki 2009.

193. TEEMU TALLBERG: The Gendered Social Organisation of Defence. Two Ethno-
graphic Case Studies in the Finnish Defence Forces. Helsinki 2009.

194. JONAS HOLMQVIST: Language Influence in Services. Perceived Importance of

Native Language Use in Service Encounters. Helsinki 2009.

195. ENSIO ERÄ-ESKO: Beskattningsrätt och skattskyldighet för kyrkan i Finland.

Steuerrecht und Versteuerung der Kirche in Finnland. Mit einer deutschen
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196. PIA BJÖRKWALL: Nyttighetsmodeller: ett ändamålsenligt innovationsskydd?

Helsingfors 2009.

197. ARTO THURLIN: Essays on Market Microstructure: Price Discovery and Informed
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198. PETER NYBERG: Essays on Risk and Return. Helsinki 2009.

199. YANQING JIANG: Growth and Convergence: The Case of China. Helsinki 2009.

200. HANNA WESTMAN: Corporate Governance in European Banks. Essays on Bank

Ownership. Helsinki 2009.

201. CATHARINA von KOSKULL: Use of Customer Information. An Ethnography in

Service Development. Helsinki 2009.

202. RITVA HÖYKINPURO: Service Firms’ Action upon Negative Incidents in High
Touch Services: A Narrative Study. Helsinki 2009.

203. SUVI NENONEN: Customer Asset Management in Action. Using Customer

Portfolios for Allocating Resources Across Business-to-Business Relationships for
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204. CAMILLA STEINBY: Multidimensionality of Actors in Business Networks. The

Influence of Social Action in Pharmacy Networks in Finland. Helsinki 2009.

205. JENNIE SUMELIUS: Developing and Integrating HRM Practices in MNC

Subsidiaries in China. Helsinki 2009.

206. SHERAZ AHMED: Essays on Corporate Governance and the Quality of Disclosed
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207. ANNE HOLMA: Adaptation in Triadic Business Relationship Settings. A Study in

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208. MICHAL KEMPA: Monetary Policy Implementation in the Interbank Market.

Helsinki 2009.

209. SUSANNA SLOTTE-KOCK: Multiple Perspectives on Networks. Conceptual

Development, Application and Integration in an Entrepreneurial Context. Helsinki
2009.